1951-06-15

[Stage Direction]
Third report of standing committee on external affairs.-Mr. Bradette.


Right Hon. L. S. St. Laurent (Prime Minister) moved:: That a special committee consisting of Messrs.: Weir, Tremblay, Casselman, Knowles and Shaw be appointed to confer with Mr. Speaker and, with his assistance, to prepare and report a list of members to compose a select committee of the house to consider with Mr. Speaker the procedure of this house for the purpose of suggesting any changes that may be desirable to assure the more expeditious dispatch of public business, with power to send for persons and papers and to report from time to time its findings and recommendations to the house.
He said: Mr. Speaker, the leader of the opposition (Mr. Drew) has kindly consented to be the seconder of this motion.


[Stage Direction]
Motion agreed to.


Hon. Paul Marlin (Minister of National Health and Welfare) moved: that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to bring in a measure respecting old age assistance and to provide for the payment to the provinces out of the consolidated revenue fund of amounts in respect of old age assistance paid by the provinces, to certain persons who have attained the age of sixty-five years and who are in need of such assistance, not exceeding, in respect of any recipient, fifty per centum of forty dollars monthly or of the amount of old age assistance paid by the provinces monthly to the recipients, whichever is the lesser; and to provide for the making of agreements with the provinces in relation thereto and for the conditions and duration of such agreements.
He said: His Excellency the Administrator, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.


Mr. Knowles:: Good for the Administrator.


[Stage Direction]
Motion agreed to.


Paul Joseph James Martin: that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to bring in a measure respecting allowances for blind persons and to provide for the payment to the provinces out of the consolidated revenue fund of amounts in respect of allowances for blind persons paid by the provinces, to certain persons who have attained the age of twenty-one years, and who are blind and in need of such allowances, not exceeding in respect of any recipient, seventy-five per centum of forty dollars monthly or of the amount of the allowance paid by the provinces monthly to the recipients, whichever is the lesser; and to provide for the making of agreements with the provinces in relation thereto and for the conditions and duration of such agreements.
He said: His Excellency the Administrator, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.


[Stage Direction]
Motion agreed to.


Hon. Douglas Abbott (Minister of Finance) moved: that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to introduce a measure to consolidate and revise the Department of Finance and Treasury Board Act and the Consolidated Revenue and Audit Act, 1931, and certain other acts; to provide for the organization and functions of the treasury board and the Department of Finance, and the appointment and functions of the comptroller of the treasury; to regulate the collection, management and disbursement of public money, public borrowing, the management of the public debt, and the acquisition, recording and issue of public stores; to provide for the keeping of adequate public accounts, the audit thereof, and the appointment, salary and functions of the Auditor General of Canada; to provide for the control of the financial affairs of the crown corporations; to regulate the terms and conditions upon which contracts may be made on behalf of His Majesty; to provide a procedure for the write-off of debts owing to His Majesty that have become uncollectible; and to provide for the management of the consolidated revenue fund and for the making of certain payments therefrom.

Inquiries of the Ministry
He said: His Excellency the Governor General and His Excellency the Administrator, having been made acquainted with the subject matter of this resolution, recommend it to the consideration of the house.


[Stage Direction]
Motion agreed to.

[Stage Direction]
ARRANGEMENTS FOR PEACETIME RELATIONS-[DOT] ESTABLISHMENT OF CANADIAN EMBASSY
On the orders of the day:
Mr. J. H. Blackmore (Lethbridge):: Mr. Speaker, I should like to direct three brief questions to the Secretary of State for External Affairs (Mr. Pearson). As I have not previously given notice of these questions, I shall be quite satisfied to have him answer them later on.
First, would the minister tell the house what Canada is doing and has done to get upon something like a peacetime basis with western Germany? Second, would the minister consider it feasible and desirable to provide for such a state of cordiality of relations as would warrant the establishment in western Germany of a Canadian embassy? Third, have any steps already been taken in contemplation of such a move?


Mr. Speaker:: I understand that the house is going into committee of supply almost immediately and will consider the estimates of the Department of External Affairs. If that is so, I think these questions should be reserved until that time.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Is the Minister of Veterans Affairs yet in position to answer the question I asked on Tuesday with regard to the relationship between the War Veterans Allowance Act and the new old age pension legislation?


Hon. Hugues Lapointe (Minister of Veterans Affairs):: The matter referred to in the question asked on Tuesday by my hon. friend is being reviewed and considered at the present time. I can assure my hon. friend that no veteran is going to suffer from the introduction of the old age security legislation.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. J. J. Smith (Moose Mountain):: I should like to direct a question to the Minister of

Resources and Development. Has the government of Saskatchewan requested the federal government to enter into an agreement for housing in Estevan under section 35 of the National Housing Act? If so, is the federal government prepared to enter into an agreement for this purpose?


Hon. Robert H. Winters (Minister of Resources and Development):: Section 35 of the National Housing Act has to do with dominion-provincial projects. Having in mind the difficulties attendant upon house building at this time, and the great interest of my hon. friend in housing in Estevan, a matter which he has kept before me since he entered the house, I think perhaps I should answer his question in a little more detail than I might otherwise do.
In a letter dated June 5, 1951, the minister of social welfare and rehabilitation asked for our approval of housing in a number of municipalities, including Estevan. No specific project was submitted. In my discussion with Mr. Sturdy and in my correspondence with him I pointed out the difficulties involved in building houses at this time, and stated that we must see to it that of the houses built in Canada, as many as possible are located in defence production areas. We discussed the high costs of housing, the desirability of contemplating economic rentals, and the need to build houses only in projects sufficiently large to enable us to realize all possible construction and operating economies. It was considered that projects under section 35 should not be smaller than forty or fifty units. That is why in our discussion we talked in terms of applying section 35 only in the larger municipalities.
We have not yet received details from the government of Saskatchewan about costs and consequent rental levels, and are therefore unable to form an opinion as to whether or not housing can be produced in small projects in the smaller municipalities which will be within the range of the local rental scale. However, with due regard to the above factors, we doubt that it is practical for any of the levels of government concerned to contemplate at this time housing under this section for municipalities having populations as small as Estevan.
I would suggest to my hon. friend that there are other sections which might more appropriately be considered if operations within the scope of the National Housing Act are contemplated for Estevan.

Supply-External Affairs Mr. Knowles: What are the amendments?



DOUKHOBORS


[Stage Direction]
On the orders of the day:
Mr.   H- W. Herridge@Kootenay West: should like to direct a question to the Minister of Citizenship and Immigration. In view of the expressed desire of the Sons of Freedom to be moved from the district of Kootenay West to the Adams lake district north of Kamloops, and in view of the fact that their request has been referred to the federal and British Columbia governments, will the minister inform the house whether the federal government intends to facilitate the movement of these people from Kootenay West to the Kamloops district?


Hon. W. E. Harris (Minister of Citizenship and Immigration):: Mr. Speaker, I am not familiar with the problem that has been raised by the hon. member, although I well understand his desire to facilitate this movement. I understand that our estimates will be discussed perhaps later today, and in the meantime I shall be glad to look into this matter and advise my hon. friend when the estimates are under consideration.



COST OF LIVING


[Stage Direction]
On the orders of the day:
Mr. Wilfrid LaCroix (Quebec-Montmorency):: May I ask the Minister of Trade and Commerce if it is the intention of the government to take immediate necessary steps to slow down the rapidly rising prices of meat in Canada which are contributing so much to the high cost of living?


Right Hon. C. D. Howe (Minisier of Trade and Commerce):: The officers of my department are studying the situation of rising meat prices which are due to abnormal demand from the United States at this time. No conclusion has been reached as yet as to what can be done about it, but we will do our best to prevent meat prices from reaching too high a peak.



CUSTOMS ACT


Hon. J. J. McCann (Minisier of National Revenue) moved: the second reading of and concurrence in amendments made by the Senate to Bill No. 198, to amend the Customs Act.


James Joseph McCann: One amendment has to do with grammatical construction, and the other has to do with the time within which an appeal may be made for the remission of taxes. It was six months in the bill which was passed here, and it has been extended to twelve months.


Mr. Fleming:: It is obvious that the Senate has made an amendment which should have been made in this house. I think the house will welcome the amendment.


[Stage Direction]
Motion agreed to, amendments read the second time and concurred in.


Clarence Decatur Howe: the second reading of and concurrence in amendment made by the Senate to Bill No. 355, respecting weights and measures.


Stanley Howard Knowles: Will the minister say what the amendment is?


Mr. Mcllrailh:: The amendment is to
schedule II. It corrects a typographical omission of the words "the pound, which is". These were left out of the schedule in describing the standard unit of weight. It was purely a clerical omission of the words.


Stanley Howard Knowles: Like leaving out a comma.


George James McIlraith: Very much.


Mr. Graydon:: Is not a clerical omission a mistake?


[Stage Direction]
Motion agreed to, amendment read the second time and concurred in.
[Stage Direction]
The house in committee of supply, Mr. Dion in the chair.
DEPARTMENT OF EXTERNAL AFFAIRS Department and missions abroad-
84.	Departmental administration, $2,272,597.
Gordon Graydon: Does the minister intend to make a statement prior to the discussion of his estimates?


Hon. L. B. Pearson (Secretary of State for External Affairs):: I have no intention of making a general statement at this time, but I shall be glad to deal with questions that may arise during the discussion of my estimates.


Gordon Graydon: Mr. Chairman, I desire to make a few remarks with respect to the

Supply-External Affairs estimates of the Department of External Affairs. As you know, they have just been returned to committee of supply after consideration by the standing committee on external affairs. I want to deal with only one or two matters which perhaps should be enlarged upon and emphasized at this time.
My first reference will be to the question of the proposed Japanese peace treaty and rearmament plan. I have no desire to discuss the Japanese peace treaty at this time, except to suggest to the minister that, when he is replying to the various questions that will be raised in committee of supply, he should deal with the matter of Canada's position in that regard. There must be a good deal of confusion in the public mind as to what is going on with respect to the negotiations leading up to the proposed agreement. First pf all we have Mr. Dulles going to Japan and then to Great Britain. Press reports from time to time have indicated that agreements have been reached. There is one this morning from London indicating that, on the question of representation of Red China as opposed to nationalist China, some agreement has been arrived at between the United States and Great Britain, a very familiar kind of agreement in diplomatic circles-that no decision will be made with respect to that matter until later.
I think a problem must be arising in people's minds as to where Canada fits into these unilateral or bilateral negotiations which are being carried on by the United States of America and their representatives. We have not had a call from Mr. Dulles in Ottawa. We would like to know whether or not we have been kept in touch with all the developments, whether or not in his various travels abroad he has carried with him some implied or express authority from Canada with respect to our stand, and what the reaction of this country may be expected to be after the agreements have been finally drafted and put into a form satisfactory to these other countries. We have a say with respect to the Japanese treaty, and I think the minister should advise the committee what method we have employed to make our voice heard in these negotiations.
I also want to raise another question, and it is also one that I think is in the minds of the public. While the military and political aspects of the Japanese negotiations are of immense importance, and I think no one would desire to minimize their importance in any way, there is a problem concerning economics, finance and trade which I trust the government will not allow to be disregarded when the final negotiations are in progress. We must be certain that not only the political
[Mr. Graydon.l

and military situations are given due consideration by the powers involved, but also the economics and trade effects of this treaty. That question should be dealt with by the minister during the course of this debate. We would be interested to learn how we fit into the picture so far as any arrangements for peace with Japan are concerned. As the minister well knows, some of the main markets of Japan are now cut off by virtue of Red Chinese domination of the great mainland of China. That in itself raises an obvious question which should not be disregarded in any consideration of a peace treaty with Japan.
I also want to mention another matter which was regarded as of sufficient importance to occupy a place in the report of the external affairs committee. I refer to the recommendation concerning the actions of future Canadian delegations at the general assembly of the United Nations. It is a recommendation with which I am thoroughly in accord. It gained unanimity in the committee, and is worth while mentioning. It reads as follows:
Your committee also recommends that future Canadian delegations to the United Nations general assembly continue to urge that the budgetary contribution which the Soviet union and associated countries make be increased to figures which more closely correspond to their capacities to pay.
As the committee is aware, there has been a scandalous disproportion between other countries and the Soviet union with respect to their assessments and contributions to the cause of peace as represented by the United Nations organization. The budget of the United Nations of course calls for a certain percentage from each country as its share of the upkeep of that organization for the preservation and maintenance of peace. Russia has 180 million people, and Canada 14 million or thereabouts; naturally that disproportion in population causes the raising of eyebrows when we realize that the 180 million people pay a little less than seven per cent of the entire United Nations budget, while Canada, with only 14 million people, pays 3-3 per cent.
I want to commend the delegation from this country for the stand they have taken on this matter. It is not Canada's fault that we have not had a better deal with relation to the Soviet union. I think the standing committee was the place to initiate such a recommendation, and we should tell the United Nations we are not satisfied to allow a nation like the Soviet union, which calls itself a great power and shows all evidence of being a great power, to pay only a little less than seven per cent of the total budget of the whole United Nations organization. A country that can boast of 178 armed

divisions and 30,000 aeroplanes, all poised for any eventuality of war, is not a nation that should be arguing that it should make a small contribution to this organization which would preserve peace. It does not make sense.
In addition, I think attention should be drawn to the fact that if the contribution is determined on the basis of the amount expended for war, then the Soviet union should make a corresponding contribution in the interests of peace. To some extent at least that would balance their activities in the international field. Moreover, they should pay more to the United Nations because they do more to sabotage that organization, and it seems to me there is no justification for the present arrangement.
I was amazed, as I suppose everyone in Canada was, at the last meeting of the United Nations to find a huge budget for the rehabilitation of Korea. That was somewhat premature, as events have developed; nevertheless something like $350 million was being set aside for that purpose, a committee was being set up, and all arrangements were being made under which we would play our part together with the other peace-loving nations in rehabilitating that war-stricken country. But of that $350 million the Soviet union were not putting up a single cent, nor was there any suggestion that they should put up any money. In other words, the people who were not to blame for the Korean problem were having to pay for the intervention of other people.
The whole picture is sordid; but by concurring in that part of the report we will tell the world that Canada is not satisfied with the way the Soviet union is meeting its obligations. It is bad enough to have them disturbing world peace as they are, without our having to pay more as our share of the cost of maintaining it. That, in simple terms, is what I wish to convey to the house-to say how strongly I endorse that part of the committee's report.
In addition I wanted to make one or two references to the recommendation with respect to the international service of the Canadian Broadcasting Corporation. On this subject some evidence was adduced, though perhaps not as much as the committee might have liked. This question, of course, has a dual significance, and the matter may be said to be under dual jurisdiction. Some of these recommendations might have gone further had it not been for the fact that the committee was anxious not to tread upon the toes of another committee which might be dealing with the Canadian Broadcasting Corporation, which of course has jurisdiction over the international service. Nevertheless
Supply-External Affairs it was made crystal clear that for geographical reasons, with the international service in Montreal and the external affairs department in Ottawa, questions of clearance concerning policy, details and the programs beamed to these other countries make for an unmanageable situation. That was one reason why we in the committee felt we could not go further than simply to call for closer liaison between the department and the international service with respect to policy.
However, I think most committee members have come to the conclusion that we have reached the end of the era of just trying to speak to our free-power friends through the international service. I believe the day has come when we must change our approach and try to reach some of those behind the famous iron curtain who may wish to become our friends. We are told by those who ought to know that there are millions upon millions of prospective listeners in those countries, behind the border between freedom and slavery, who are anxious to hear the message from this country, and there is a very good reason why Canada is in perhaps a much better position than any other nation in the world to speak to those people. We are not suspect as being a great power. We are not suspect as having any international axe to grind. Our reputation and prestige as a people are high, and for those reasons a message from this country would carry more weight.
I was amazed to find that only a very small percentage of our broadcasts is directed to those people. For instance, no broadcasts at all are being beamed to that great section of the Soviet union known as the Ukraine, though some of the most democratic and freedom-loving Ukrainians in the world are to be found in Canada. I mention that to suggest that the percentage of our shortwave broadcasts beamed to countries behind the iron curtain should be increased, and our whole approach to this question changed in view of the fact that we are in the twilight stage between peace and war. No longer can we be said to be in a definite period of peace. I had not intended to elaborate on that point, but I did want to suggest that there is a need, perhaps not for additional facilities, but for a change in the use of the present facilities.
Then I wanted to mention a matter having to do with questions of unanimity and unity at top levels among the major free powers. I suppose nothing has disturbed our people more than the fact that from time to time there have been superficial difficulties, particularly between the United Kingdom and the United States, at high international levels.

Supply-External Affairs I have heard it suggested from time to time, as indeed it was suggested by the hon. member for Winnipeg North during a debate in this house on a resolution which was later withdrawn, that consideration should be given the setting up of an Atlantic union. I believe most people understand my views in that respect. I think the objective is good; but I agree with what the minister said during that debate, that there is a time and season for all things, and I am not at all sure we have arrived at either the time or the season to proceed along those lines. I do agree that it is an objective we must always keep in view, to which this generation may properly look as a plan for the future.
I have been greatly impressed, as I think every member of this committee must have been-and particularly my learned colleague from Lake Centre-with the fact that at its various meetings the commonwealth parliamentary association has done an immense amount of good in acting as a clearing house for the exchange of views not only among governments but among those who have been elected to office, regardless of their political opinions. That is one of the great advantages of the commonwealth parliamentary association, and I believe those advantages are being realized more and more as the years go by. I believe there is a need for an expansion of that type of endeavour. I throw out this suggestion to the committee:	I am wondering if we should not have, as an experiment, some kind of informal meeting of representatives of the United Kingdom, Canada, and the United States, in which there could be frequent clearances of opinions as between men and women of the various political parties who have been elected to the parliaments of those countries. I am not so sure that that would not result in our finding some common denominator for understanding between the peoples of these nations.
It seems to me it is not good enough always to have governments meeting and deciding things, because all governments are not like this one in that they have not such a large majority in the legislature. A good example of this is found in the congress of the United States, and in the slim majority of the Attlee government in Britain. These are factors which might properly be considered. Personally, I should like to see some move made whereby selected representatives from this parliament, from the congress of the United States and the parliament of the United Kingdom, could get together in frequent meetings something similar to that of the commonwealth parliamentary association- not anything in the nature of a strait-jacket organization, but simply with a view to having informal discussions from time to time


for the purpose of clearing up misunderstandings which arise between the peoples of those countries. There would be the additional advantage that the representatives would bring back to their respective legislative bodies, just as they do from the commonwealth parliamentary association, an appreciation of the other person's point of view, which is essential if the free peoples of the world are to march together in common understanding and with common objectives. It is only a personal proposal that I put forward, but I suggest that it is at least worthy of consideration. *
I wish to refer now to a project which has been approved by every political party in Canada. It has been approved by governments, and it has been endorsed by the party to which I have the honour to belong. It has not yet, however, been the subject of the action which I believe should be taken. I should like to have seen in the report of the external affairs committee some recommendation in connection with the St. Lawrence waterway. Such a reference would have afforded the committee, for the first time since the agreement was made in 1941, an opportunity to discuss the matter and record its position. I believe this should have been done some time ago. The agreement was made on March 19, 1941. So far as Canada is concerned, the treaty that was signed at that time, and endorsed by the government, is awaiting approval by the Senate and House of Representatives of the United States.
In 1895 the first move with respect to this matter was made when the United States and Canada set up a committee of inquiry. In 1932 the St. Lawrence deep waterway treaty was signed by both countries, but it failed to achieve a two-thirds majority in the United States Senate, so the matter was dropped again. In 1941 the St. Lawrence basin agreement was entered into. At the instance of the United States Senate some changes were made in it in 1949 in order to make it more acceptable to both countries.
In order to show how this matter comes within the purview of the Department of External Affairs, I might say that in between those periods the permanent joint board of defence for Canada and the United States more than once urged that this waterway ought to be completed as a defence measure. From the strait of Belle isle to the lakehead cities of Fort William and Port Arthur is a distance by water of 2,225 miles. It is perhaps the most important inland waterway in the whole world, yet in between those points there is a forty-mile bottleneck which ought to be removed. In this enlightened day and age, when the needs of trade and

commerce, defence and power are all calling for the removal of that bottleneck, it does not make sense that we should delay the construction of this short protected route through the heart of a continent. There is a need for it in time of war as well as in time of peace, particularly in view of the high transshipment costs which the present undeepened waterway causes.
So far as my own part of the country is concerned we are perhaps more keenly interested in this project than some other parts of Canada. For that reason I hesitate to speak on behalf of anyone else in connection with it. On behalf of my part of the province of Ontario I want to say that we have enough power to care for our needs up to the end of 1956. Beyond that we are faced with a bottleneck so far as power is concerned, unless the 1,100,000 horsepower available in connection with the St. Lawrence river project are brought into being. In that forty miles there are 2,200,000 horsepower available to both countries. In addition to that, farther up the waterway there is another estimated two and a quarter million horsepower, but nothing has been planned yet with respect to its development.
This problem was emphasized by a recent visit to the Canadian international trade fair by representatives of the great lakes states bordering this country. Of course, they are interested in the project just as we are. They are just as much concerned as we- are about the lobby which is going on now in congress. They point out that the Mesabi iron range in the state of Minnesota is rapidly petering out and that the ore which normally would come from there is being depleted. That situation, of course, creates a special need, in time of defence preparations, for the necessary raw material which is available in Canada from time to time but which needs a waterway for its transportation. Representatives of Ohio, Michigan, Illinois, Wisconsin and Minnesota have not only expressed their great anxiety, just as we have done, for a movement towards the St. Lawrence waterway development on a basis of immediate urgency, but have welcomed Canada's challenge to build this waterway alone.
I suggest to you, Mr. Chairman, that these states are so anxious-as we are-to have the waterway built that some discussion has taken place in their various legislatures or among their state officials with regard to finding some way, under international law, by which they could assume some portion of the cost of a joint undertaking. I want to say this-and when I do so, I speak personally; but as a matter of fact all the
Supply-External Affairs party platforms have called for a joint undertaking of the St. Lawrence development. Frankly, sir, I think that perhaps in the end the best thing that could happen to Canada and to Canadians would be for us to start now to build the St. Lawrence seaway on our own. There are a great number of reasons why that should be done. More than that, even if the present congressional committee makes a favourable decision-and there seems to be a good deal of doubt as to its decision-and recommends a joint undertaking on the St. Lawrence deep waterway, our experience has shown-and perhaps it is indicated in our own parliament as well- that there are a great many ways in which congressional delays can occur. Once that committee has endorsed the undertaking, some other committee or some other body through which it must go for final ratification and approval can block it in its course. One of our real problems is this:	Are we now
running into a long period of indecision from which Canadians may find it difficult to extricate themselves? Americans may say:	Of
course we are studying the matter, and we are still dealing with it; while we are still dealing with it Canadians would, of course not want to make any move with regard to it.
It seems to me that we as a nation should not delay any longer in saying to the United States government that Canada is now proposing to proceed with the great lakes-St. Lawrence waterway on its own, and that in the years ahead we shall look forward to the completion of this great project as a matter of national pride. In the past we have done great things as a nation, both in peace and in war. Let us do this one other great thing and show the United States people and the United States government, as well as our own people, that after all we have the capacity and the desire to see to it that this mid-continent waterway, the greatest of its kind in the world, shall no longer be bottlenecked by forty miles of unnavigable water.
In my opinion that is the course which should be pursued. I say it is my own personal opinion, because I do not want to bind members in any part of the house with respect to the matter. But it is my view that we should not delay a moment longer in arriving at our decision, making it known, and starting upon what would be one of the most beneficial ventures in the field of transportation, commerce and business- that Canada has thus far undertaken.


Mr. Coldwell:: Mr. Chairman, perhaps the minister will permit me also to ask him some questions, so that he may answer them when he is answering others that have been asked.

Supply-External Affairs May I just say to him that if I am obliged to leave before he speaks, I hope he will understand that it is because of a firm appointment I have made, and that I must leave on that account.
First of all, I think the standing committee on external affairs performs an extremely useful function indeed. Those of us who were privileged to be members of it, both this year and in past years, I think understand how valuable this committee is to the house, since we can have before us the officials as well as the minister, and can not only ask questions about the broad outlines of our external policy, but can get many of the details that it would perhaps be difficult for us to obtain in the house.
May I also say this, Mr. Chairman, because one likes to do these things once in a while. As one who has attended a number of international conferences with officials of the external affairs department and has sat with them at the meetings of the external affairs committee, may I express my tribute to the work that the officials of that department are doing. I think the minister is to be congratulated on having around him the able officials, both in the country and outside of it, that we have in that department.
I now wish to refer briefly to what the hon. member for Peel has said in one or two connections. I agree with him that, in spite of the failure of the Canadian delegation to obtain a fairer distribution of the assessments made by the United Nations, we should not give up the struggle; we should continue to press continuously for a fairer apportionment of the costs of running the United Nations. It is perfectly true that the Soviet union is paying a relatively small amount, namely, about twice what we are paying. That amount, it seems to me, is out of all proportion to the influence and power that that great country assumes and exercises in the councils of the United Nations and of the world generally.
I should also like to say that I agree with the views expressed by the hon. member, and which have been expressed by others in this chamber, with regard to an Atlantic union. The hon. member for Winnipeg North is performing a useful service to this country- and indeed to the nations associated in the North Atlantic alliance and to other nations that might be brought into the organization,- in promoting this idea. True, it involves a surrender to a greater organization of some of the sovereignties we now possess, but in the interests of peace that course probably
[Mr. Coldwell.l
will have to be taken sooner or later when public opinion and world conditions are ripe for it.
I wish also to refer especially to the news reports of the proposed Japanese treaty. I quite agree with those who think that western Germany and Japan cannot be kept permanently out of the family of nations. It is now nearly six years since the war ended, and, under ordinary circumstances, history would show that by this time peace treaties should have been written. They have not been written. It is essential that those countries should now, after six years, be brought into the relationships which are normal in peacetime between nations. I just want to say this, however. As the committee knows, we thoroughly approved Canada's support of the United Nations in resisting the aggression of the North Koreans. We shared with other hon. members-and with the government, I believe-the hesitation that was felt when the 38th parallel was crossed. We certainly feared the effects of the approach of the United Nations armies to the Yalu river and the provocation that might be felt by the government of China. I view with considerable misgiving the proposal to write a treaty with Japan, leaving out nations which are involved in the Far East, at a time when, to say the very least, there is some uncertainty about the future relationships of China. I fear that what we are doing, step by step, is to push'China, the new China, more completely into the Russian orbit. And I believe the new China as it exists today is the China of the future.


Mr. Maclnnis:: It is here to stay.


Major James William Coldwell: As my hon. friend says, it is here to stay. The government of the China of the future might not have the same attributes as the government of the China of today, but at least the revolution has occurred; the revolutionary government is in power and is going to remain in power. The future of the world depends very largely upon the manner in which we can bring about a better understanding between the revolutionary government of China-and the governments that will follow it, arising out of this revolution-and the democratic world. It was with a good deal of misgiving that one read in the newspapers this morning and heard over the radio last night of the proposal for the signing of a peace treaty to which a government of China later on will be invited to attach its signature, and, as I understand the proposal to be, to co-operate in the terms of the treaty.

There is no question in my mind that Chiang Kai-shek and the group of reactionaries, as they have been described by the hon. member for Lambton-Kent, are permanently eliminated as a factor in China. Any attempt to restore that government on the mainland of China will be, I believe, a tragedy for Asia and a tragedy for the world. We know pretty well the opinions of most members of the commonwealth of nations, including India and Pakistan. While Burma is outside the commonwealth, we hope that country will remain on the friendliest of relations with the commonwealth; and we know what their views are on this matter.
I do not know what part has been taken by the Department of External Affairs, the government or the minister in regard to these discussions; but I ask the minister very pointedly if he will indicate exactly what is the position of Canada and the policy of the government in regard to this agreement that is reported to have been made between the United Kingdom and the United States.
After all, we are a Pacific nation. Our borders are washed by the Pacific ocean on the west, and we cannot be negligent of or oblivious to what happens in the Pacific area. It would be well for the minister to tell the House of Commons and the country categorically just where we stand in connection with this matter, involving, as it does, what may be a fateful agreement or understanding.
I want to see communism stopped everywhere. I believe that totalitarian communism menaces the world, but I also believe that if we adopt policies that throw great masses of the people, whether because of their poverty and misery and want or because of situations similar to those in China today, into the orbit of the Soviet union, we are bringing about a situation which will mean a third world war and, in all probability, the destruction of the type of civilization to which we aspire. Certainly it will restrict the freedom we all wish so wholeheartedly to expand.
I know of no announcement in recent weeks that has caused me so much disturbance as the announcement made last night and repeated in the newspapers this morning. We were happy indeed when it seemed that the United States, in removing MacArthur, was endeavouring to reach the point where a negotiated settlement of the Korean conflict could be achieved.
China has unlimited manpower, and the suggestion that we can fight her successfully, that we can bomb her cities, and so on, into submission, seems to me to be quite unrealistic. With her manpower and resources she would ultimately swallow the forces
Supply-External Affairs of occupation of the nations that are associated together in what we call the democratic or free world. Success does not lie that way.
I would ask the minister to tell us as nearly as he can what part, if any, Canada has taken in connection with the agreement that has been reached; what the views of the government are in this regard, and what the policy of Canada is to be in connection with it. I am sure many people in this country will be anxious to have that information, and I suggest this is the opportunity for the minister to give that information.
That is the only point I am going to make this morning. I do hope we shall have a clear statement from the minister about the proposed Japanese treaty.


Lester Bowles Pearson: Mr. Chairman, the hon.
member for Peel and the hon. member for Rosetown-Biggar have brought up for discussion some very important questions. Most of them, if not all, were given careful consideration by the committee on external affairs, which has now reported to the house.
Possibly at this point I might be permitted to pay tribute to the work of that committee, and especially to its chairman, who has the respect, and indeed the affection, of all of us.
I hope I shall not be expected to repeat on questions of general policy statements I have made in the house and before the committee. But there are some specific questions which have been raised, and of course I shall do my best to deal with them.
The first, and possibly the most important, which has arisen in the discussion so far is that of the proposed Japanese peace treaty. Our position as a government in this matter has been made pretty clear to the house: we are in favour-and I am sure the house is in favour-of the earliest possible conclusion of such a treaty-


Major James William Coldwell: Hear, hear.


Lester Bowles Pearson: -so that Japan may be brought back into the family of nations and play her part as a strong democratic country, especially in Asian affairs. So we have welcomed the discussions which have taken place to that end. When we were consulted, as we were some months ago, as to the form which these discussions should take, we agreed with our friends in Washington and London that possibly diplomatic talks initiated by the United States with other governments interested, rather than a general conference, would be the best way to proceed in the present circumstances. As the committee knows, these talks have been proceeding and are now reaching finality.
In all this process of consultation we have played our part and have been informed of

Supply-External Affairs developments as they occur. We certainly have no complaint to make in regard to the methods that have been adopted to keep us informed. Mr. Dulles has consulted with our representative in Washington and our representative in Tokyo. I was in Washington yesterday and had a discussion with the assistant secretary of state in charge of Far Eastern affairs. There was an official discussion in Washington between United States, United Kingdom and Canadian officials a few weeks ago, which discussions were resumed in Ottawa a few days after they had finished in Washington. This question has also been discussed in London. I think it is true to say that we have been kept informed and have played a reasonably active part in the negotiations leading up to the present position.
In the early days of these negotiations a draft was circulated by the' United States to the governments more particularly concerned. We made comments on that draft on May 1 and May 21 and gave our views in some detail on every single clause. Having received'the United States draft, at that time the United Kingdom made certain counterproposals of its own, and we also made known in London our views on those counterproposals. In recent days there have been discussions in London between Mr. Dulles and the United Kingdom government designed to remove the differences which had developed in the preliminary discussions between the United States and the United Kingdom approaches to certain of these questions. Those discussions have resulted in an almost complete measure of agreement between London and Washington, and I understand that as a result a combined United States-United Kingdom draft will now be submitted to the other governments concerned for their observations. Once those observations are received it is hoped that a peace treaty may then be speedily concluded.
I am in some difficulty in making known at this particular time our final views in respect of the agreement, if it is a formal agreement, reached in London. We have not yet received any final text of the discussions in London, and I do not think it would be wise for me to express any final view in regard to this matter until that text is received. Of course the committee and parliament know that there have been one or two contentious points in these discussions. They have been mentioned here this morning. One concerns the association of China with the peace treaty, and the other is the disposition of the island of Formosa.
Our position in regard to the former is that this question of Chinese signature on a

Japanese peace treaty should be postponed without prejudice- to any eventual solution. I think the reason for that is obvious. I think it is known to all members of the committee that the United States has recognized one Chinese government while the United Kingdom has recognized another Chinese government. Obviously it would be difficult indeed for them to agree at this time on a Chinese signature to a formal Japanese treaty. Therefore this device has been adopted which I presume will result in a postponement of this issue for the time being, I hope without prejudice to a final and satisfactory solution.
Similarly, with regard to the question of Formosa I think we are all agreed that Japanese sovereignty in Formosa must be brought to an end. I have no doubt that that will be done in the peace treaty. I think it is also pretty clear that the eventual disposition of Formosa cannot be made in any draft treaty at this time. I do not think I can say anything more at this time on this matter.
There were one or two other points that were raised in connection with the proposed Japanese treaty. The hon. member for Peel called attention to the difficulty that we had had in pre-war times in trading with Japan, and stated that he hoped the treaty would take those difficulties into consideration. I can assure him that we have been much alive to the problem. We realize that in pre-war times there were certain difficulties in regard to Japanese trade, and I hope that the treaty will make that situation easier in the future. We have been particularly interested in the fisheries clauses of the treaty. In order to discuss those clauses the Minister of Fisheries, accompanied by some of his officials, visited Washington to take up the matter there with the United States and United Kingdom people. We hope that as a result the fisheries clauses of the treaty will be satisfactory to Canada.
Perhaps I can now deal with one or two other questions that have arisen during the course of the discussion. Both the hon. member for Peel and the hon. member for Rose-town-Biggar stressed the desirability of continuing the struggle in the United Nations to increase the proportion of the cost of that organization to be borne by the U.S.S.R. We have taken a most active part in that agitation, as the hon. member for Peel pointed out, and will continue to do so. The present proportions are most unfair to other members of the organization, and we hope we shall be able to make further progress during the next assembly in the direction of increasing the proportion of the cost to be borne by the U.S.S.R. and its satellite states. We made some progress in that direction in

the last assembly, but not sufficient. We will not give up that struggle. It hon. members are interested in this particular question they will find it dealt with at. some length at page 150 of the report of the department on "Canada and the United Nations".
Incidentally I should like to point out that the hon. member for Peel was mistaken when he said the United Nations had set aside $350 million for Korean relief. The objective which has been agreed upon is $250 million, but of course that amount has not been set aside as yet


Gordon Graydon: If I said $350 million I meant $250 million, because that was my recollection of the amount.


Lester Bowles Pearson: I thought the hon. member
said $350 million.


Gordon Graydon: I do not like to be careless
with a hundred million.


Lester Bowles Pearson: Some reference was made
by both speakers who preceded me to the international service of the Canadian Broadcasting Corporation. This subject was dealt with at considerable length before the committee, and I made quite a lengthy statement on the matter, which will be found at page 85 of the proceedings. We are attempting to improve and develop our liaison with the C.B.C. international service. I think it is generally recognized by the two departments concerned that that liaison is working effectively. So far as we in external affairs are concerned, we have no complaint on that score. We are responsible for policy guidance in connection with the broadcasts, and our contact on policy matters is close and continuous. I hope it will continue that way.
The hon. member for Peel suggested that we extend our coverage behind the iron curtain. In view of the circumstances with which we are faced at the present I think the importance of that will be recognized by all hon. members. However, it would necessitate a considerable expenditure. It could not be done simply by transferring facilities now used for broadcasting, say to Latin America, for use for broadcasting to the Ukraine or Poland. An additional organization would have to be brought into the international service which would be familiar with this particular kind of broadcasting. The broadcasting now carried on to Latin America is to create a background for an increase in and development of our trade. The persons engaged in that work would not be satisfactory for the kind of broadcasting which would be directed behind the iron curtain.
Supply-External Affairs
The hon. member for Peel also made a very interesting suggestion-and he only threw it out as a suggestion-that possibly meetings of representatives of the parliaments of the United Kingdom, United States and Canada might be useful, and of course I think most members of the committee would agree. I am inclined to think, however, that that kind of interparliamentary consultation could be even more effectively carried on, if it is desirable in itself-and I think it is- if it were based somewhat more broadly than on the parliamentary institutions of the three countries. Steps toward that end are already being taken. I understand that the Council of Europe, which, as members of the committee know, represents not governments but parliaments, legislatures and all parties, has already invited observers from the United States and Canada to attend its next session at Strasbourg. The decision in that regard as to whether the Canadian parliament should be represented of course is not a decision for the government but would be a decision for parliament itself.


Gordon Graydon: I should like to ask the
minister one question. He has brought up the question of the Strasbourg meeting. Has the minister any information as to whether or not representatives are to be sent from the Canadian parliament to the Strasbourg meeting? Has any decision been made?


Lester Bowles Pearson: I do not think so. That would be a decision made by parliament, and I assume the matter would be brought to the attention of parliament by the Speaker, to whom the invitation would be addressed, if indeed it has not already been so addressed.


Mr. Adamson:: Does the minister know
whether or not it has?


Lester Bowles Pearson: I think the invitation was sent a short time ago to the Speaker, but I am not certain whether he has received it yet. It would be quite simple to find out, and I should be glad to do so during the luncheon recess.
The hon. member for Peel made some reference to the St. Lawrence waterway. I listened to his remarks with great interest, and all I should like to say about it now is that the government still hopes that this great undertaking, which should be of benefit to both countries economically, and indeed politically and in other ways, can be carried out as the result of co-operative arrangements between the two countries. That is still our hope, and that is our objective. We shall be disappointed indeed if that cannot be achieved. I am inclined to agree with the hon. member that it is desirable for the Canadian parliament and the Canadian

Supply-External Affairs government to know as soon as possible if it can be done that way. It would be unfortunate if we were kept in a state of indecision indefinitely; therefore I hope our friends in Washington will be able to come to a decision on this matter before very long. What should be the proper course for Canada will depend no doubt on the nature of the decision reached in Washington, and I do not think it would be very wise on my part to anticipate that decision now by making suggestions for alternative courses of action. Therefore I would prefer to leave the matter at that.


Mr. Diefenbaker:: What did the minister mean by political benefits? He referred to economic benefits, and I should like to know what he meant by political benefits.


Lester Bowles Pearson: I have in mind that it would possibly bring the two countries even closer together than they are now, because I think a co-operative undertaking of that kind, carried out by two peoples, should have some beneficial result on the general political relationships of those two peoples.


Mr. Pouliot:: Not of narrow significance.


Lester Bowles Pearson: I think I have dealt with the points that have been raised, and possibly I might postpone any further observations until new points are brought up in the course of the discussion.


Jean-François Pouliot: Mr. Chairman, I will be
serious, but you will excuse me, sir, if I am not solemn. A number of years ago Theodore Roosevelt used to say that to be successful in any discussion one had to use a sweet voice and carry a big stick.


An hon. Member:: Talk softly.


Jean-François Pouliot: Unfortunately from the end of the war until last December the United Nations had a big voice and no stick at all. There were provocative speeches at each meeting of the United Nations, and it was impossible to come to any peaceful agreement. In 1947 it was decided that Canada was to become a member of the security council. In an article entitled, "Do We Want Peace or War", which I wrote after having read a series of remarkable articles published in L'Action Catholique by Mr. Lorenzo Pare, then president of the press gallery, and who is just as modest as he is well informed, I wrote as follows:
Let Marshall, Bevin, Bidault and the others remain silent to listen to St. Laurent speaking to Molotov. If he is listened to, the peace effort of Canada will be greater than its war effort.
Unfortunately the prime minister of the time did not accept that suggestion, and Canada was represented on the security council by a bellicose gentleman who did absolutely nothing to promote peace.


An hon. Member:: Who was that?


Jean-François Pouliot: If my hon. friend does not know, he should not sit here.


Mr. Hansell:: It is the description we do not recognize.


Mr. Ferguson:: We do not recognize him from the description.


Jean-François Pouliot: That is unfortunate, but I refer my friend to the files of newspapers of the time. I must express my appreciation to the Secretary of State for External Affairs who has twice vindicated me. The first time was on June 11, 1950, in the Cartier byelection, when he repeated what I had said a long time before, that the United Nations could not guarantee the security of any country. The second time was after my remarks of June 29, 1950, about the Korean situation. I do not refer to his ironical and uncalled for comparison of the same day to Neville Chamberlain, as found at page 4392 of Hansard, but to his trans-Canada broadcast of five months later, on December 5, 1950, when he stated that an attempt through diplomacy to reach a modus vivendi with the Asian communist world is not appeasement. That is to be found at page 439 of the external affairs bulletin for December, 1950.
Well, for political reasons the prime minister of the time did not permit his secretary of state for external affairs to be in continuous attendance during the meetings at Lake Success; but the present minister had the honour to represent the whole white race on the cease-fire committee which was appointed not so long ago. His two fellow members were the president of the security council, the representative of Iran, Mr. Entezam, and Sir Benegal Rau of India. That was the first time, since Senator Dan-durand presided over the league of nations and played an important p'art in the drafting of the treaty of Locarno, that a Canadian had been given such responsibilities, by unanimous consent of a majority of the members of the United Nations. This also was in line with what I said in the house on June 29 of last year.
I am not to go back at length over the past, but you know, Mr. Chairman, that truth is eternal and the right to express it as one finds it cannot be questioned. I spoke on June 29, 1950. The session was prorogued the next day. On July 1 a self-appointed technician in international affairs, who is just that, wrote in the editorial page of one of the Ottawa newspapers that I was not a good Canadian just because I had expressed sincerely my views. He said, "That man Pouliot is not a good Canadian." It did not impress me. No one has yet succeeded

in terrorizing me, and I am completely indifferent to what is said about me by any journalist. But following the line of the United Nations some years ago, after having been abused in another newspaper by another swelled-headed editor, I went to the human rights committee of the House of Commons. There I lodged my complaint and asked for redress of the wrongs. The committee did nothing.
Some people may be concerned about what is said of them by some self-complacent members of the press gallery. I do not care. I find them bigoted and ignorant. I find them just as intolerant as anyone can be. It may have happened after a luncheon at the Rideau club; I do not know and I do not care. I just mention that to suggest to my fellow members not to pay any attention to any unpleasant remark that is made about them by any member of the press gallery.
Strange to say, after that young man went on a long trip to Colombo he stopped in Egypt and Turkey. There he went to the legislative buildings, and he was haunted by the souvenir of the hon. member for Rosetown-Biggar and, believe it or not, by my own. I do not know if it was in Ankara or in Cairo, but he said, "Here we see also the Coldwells and Pouliots who sit here." Then after the minister had spoken as he did on December 5, that journalist repeated exactly what I had said on June 29; I did not refer to him as "that man so and so." It was of no importance at all.
I am not to speak any longer. I am going home today to refresh myself, and I thank the committee for being so attentive to the remarks I have made.


Mr. Pearkes:: Last evening when the house was in committee of supply a sordid story of a disgraceful international episode was revealed, reminiscent of the dark days of the middle ages when fortresses were betrayed and commanders were sold for a bag of gold. A few years ago the Canadian government underwrote the sale of some seven ships to the nationalist government of China. I understand the loan was jointly guaranteed by the then government of China and the Canadian government. Those seven ships were operating in Chinese waters until the fall of the nationalist government. At that time the banks and other interests concerned became somewhat alarmed as to whether the Canadian shipyards wotild ever be paid for those vessels.
We learned last night that the Canadian government then took back those ships under Canadian registry and the Canadian flag. Since then the payments have been made to
Supply-External Affairs the banks because of the fact that some of those ships have carried on a disgraceful trade between the British port of Hong Kong and the communist ports on the mainland of China. We were told last night that two of the ships have been captured and taken over by the communists. Those ships were operating up the Yangtze river; but the other five ships were still permitted to ply between Hong Kong and the communist ports on the south coast of China. Apparently the communists are making no attempt whatever to seize the other five ships. No doubt the two ships on the Yangtze were seized because if they had left the mouth of the river and gone across the sea of Formosa the United States naval vessels blockading the entrance to the Yangtze river might have seized them, and they would not have been able to bring to China the commodities they were carrying in their cargoes. But no attempt was made to seize those other vessels which are operated by the Ming Sung Industrial Company, because, had they seized the vessels in the communist port, obviously they would not have been able to enter Hong Kong and take again and again to the communist ports the materials which the communists were so anxious to obtain. Eyewitnesses in Hong Kong report that essential war materials are daily included in those cargoes carried by those ships of Canadian registry and flying the Canadian flag. This happens at a time when Canadian destroyers are in the China seas; when Canadian men are fighting in Korea for democracy and are opposed by Chinese formations helping the North Koreans; at a time when not many miles away from these ports of southern China, Canadian missionary nuns have been imprisoned without just cause and have been submitted to treatment which comes quite close to being torture.
When I asked questions as to the nature of the cargo which was being carried, the Minister of Trade and Commerce informed this committee that he could not say whether the ships were carrying contraband on their trips to Canton and up the Yangtze river, but he hoped that they were not. If they were, he did not know what could be done about it. I suggest to the minister, through you, that the Canadian people expect this government will do something about it, and do it without any further delay.
I received my information direct from Hong Kong in a letter dated June 4, 1951, and sent to me personally by the general secretary of the China coast navigating and engineer officers guild. This is an organization of merchant marine officers sailing the China seas. It is a responsible organization. The

Supply-External Affairs communication reaches me over the signature of Mr. George T. Lloyd, general secretary of that guild, I propose to read this letter, as it contains information, and will draw the attention of this committee to the situation which I believe exists in Hong Kong today. It reads:
I am directed to draw your earnest attention to what is regarded here as a scandal exploited by a few Canadian speculative Shylocks, and which has been considered in Hong Kong to be nothing less than a profitable evasion of commonwealth maritime laws. Then there is the larger and human aspect: Canadian (?) vessels carrying war materials to Red China to murder Canadian soldiers who espouse the democratic cause and risk their lives for love of country.
The points we desire to emphasize in order to arouse public interest are the following:
1.	The vessels of the Ming Sung Industrial Company (of Canada) are at the time of writing employed in the following trades:	Hong Kong-
Macao, passengers and cargo; Hong Kong-Macao-Canton, passengers and cargo: Hong Kong-Canton, cargo only.
2.	Canton is a port under the direct control of a government with which the government of the Dominion of Canada has no relations nor political contact.
3.	What are the vessels carrying? Eye witnesses state that included in the daily cargoes is essential war materials. This is cold, concrete fact.
4.	These vessels are trading under the Canadian flag, and have it painted prominently on both sides. They wear the Canadian ensign in Chinese communist ports we know.
5.	These Canadian (sic.) vessels are officered and manned by Chinese (one has a Russian captain), who naturally have to bow and bend to the whims of the governing authority in Canton. The manning, of course, is contrary to the manning regulations of Canada and the British commonwealth. All this is officially sanctioned and tolerated, so that speculators may profit in gold.
6.	The Ming Sung Industrial Company trades in China under the flag of the "People's Republic of China"-a government not as yet recognized by the Dominion of Canada. Chinese vessels, manned by Chinese, carrying war materials to Chinese Reds.
7.	Canadian vessels are required to carry officers holding certificates issued within the commonwealth. Yet the seven vessels referred to have been trading under the flag of the Dominion of Canada since July 1, 1950, with the full consent of the government of the Dominion of Canada and the Hong Kong government acting on behalf of the United Kingdom. Regulations have been evaded.
8.	The merchant navy officers organizations, both in Canada and Hong Kong, have earnestly and repeatedly taken up the matter with the various governments concerned, with no result, nor has a satisfactory reason ever been furnished by the various governments as to why such a grotesque state of affairs is permitted to be perpetuated in spite of legitimate protest.
In conclusion, it must be emphasized that cargoes are arriving in Canton in Canadian (?) bottoms to the disgust and discomfort of Canadians serving overseas. Can you for one moment imagine Canadian vessels conveying war materials to communist China to be used against men and youths of our own blood and breed? If your imagination cannot rise to that level, let anyone of an inquiring mind travel to Hong Kong and see what has been described as unchallengeable fact.
The scandal exists!
[Mr. Pearkes.l
If the gold profits are being made in Canada, are blood-dipped dollars worth the lives of Canadian men and youths?
Conscience revolts and rebels at the thoqght of it all.
Yours faithfully,
George T. Lloyd, General Secretary
I indicated earlier that the Minister of Trade and Commerce knew of these facts, or many of them, as is disclosed in the remarks that he made last night. I think the people of Canada would much prefer to see those ships sink to the bottom of the ocean than to feel that they are carrying war supplies to a country whose armies are engaged against the personnel of Canada. They would much prefer to write off that loss, whatever it may be. I believe that the shareholders of the banks and of the trading companies concerned would rather lose that money than feel that it is tainted with the blood of Canadian soldiers.
I should therefore like to ask the Secretary of State for External Affairs a few questions on this point. When were the two ships that are reported by the Minister of Trade and Commerce to have been seized in the Yangtze, seized or taken over by the communists or people's republic of China? Did the Canadian government make any protest at the time that those two ships were seized? Are these ships still being operated by the Ming Sung Industrial Company? Does that company operate or maintain agencies or have connections throughout communist China at the present time?
It will be noted that in the letter I read it was claimed that ships of the Ming Sung Industrial Company were now operating under the flag of the people's republic of China in Chinese ports. I should like to know whether this Ming Sung company, which I believe is a big organization with many ramifications, operates in communist China at the present time. Then I should like to ask this question: On whose authority were those ships, their officers and crews, given exception from the marine laws passed by this parliament?


John George Diefenbaker: And was it under order
in council?


George Randolph Pearkes: That was another point I
had noted. Was it by order in council? Has some secret order in council been passed, or was it just on the written authority of some minister? Finally, I should like to know how much money has still to be paid for these vessels; and if so, what payments have been made to date, and by whom.

I feel that these are points upon which the country deserves enlightenment. If the Minister of Trade and Commerce does not know how this problem can be solved, I think we must rely upon the Secretary of State for External Affairs to find a solution. The Minister of Trade and Commerce said that it was not his baby. He passed it over to external affairs, to transport, to finance, or to somebody else. But the people of Canada will not tolerate this sort of thing. Appeals are being made today for the youth of Canada to serve in Korea. The people of Canada are, I think, ashamed-and certainly I am-to think that this government has any part or parcel of any transaction which will enable supplies to be sent to the enemy. If it is a matter of money-if this government would have to pay money if the payments were not made to the shipyards-th,en I say: Let us pay that money and let our hands be clean. We do not want to have any money that is tainted with the blood of our soldiers.


Lester Bowles Pearson: Mr. Chairman, the hon.
gentleman who has just spoken has asked for certain information. He also has put a question on the order paper dealing with this point. He will get that information; and when he gets it, I think he will be sorry that he made some of the statements he made this morning. He bases those statements on a letter, on evidence which he had with him; and from his remarks I assume that he associates himself with the accuracy of those statements, or their inaccuracy. He has called them, I think-to use his own words-"cold concrete facts."


George Randolph Pearkes: Those were the words which were used in the letter. I was quoting the letter.


Lester Bowles Pearson: Yes; that is what I am suggesting. The hon. member has based his serious allegations against the government on a letter which he has quoted to the committee, and with which, I assume, he associates himself as to its accuracy. I want to say now, Mr. Chairman, that when he gets the information which we shall be extremely glad indeed to give him, I think he will not be so happy about the source of his information. In his remarks this morning he talked about scandals, about disgraceful trade, about eyewitnesses in Hong Kong testifying that these ships are loading war materials daily for the Chinese communists; and he has made other statements of that kind which do not correspond with the information which we have and which, I can assure him, is at least as authoritative; I think it is much more authoritative than is
Supply-External Affairs the letter which he has just read to the committee. When the information is given, however, the committee will itself be able to judge as to the validity of my statement.
What I want to say now is that this matter came to our attention, as it did a short time ago-


John George Diefenbaker: When was that?


Lester Bowles Pearson: When we received a letter from the same organization to which the hon. gentleman has referred. We received that letter, I think, last week. That was the first time, to my knowledge-and I am speaking only for myself at this moment-that any suggestion had been made that these ships were being improperly used. As soon as that letter was received, I at once took the matter up with my colleagues in the cabinet, and we sent a telegram at once to the Canadian official representative at Hong Kong requesting him to check up on those allegations and to give us all the information that it was possible for him to give. We have also taken the matter up with the United Kingdom authorities at Hong Kong. So far, although our information is not complete, we have not received any information which would justify the allegations made in the letter to which my hon. friend has referred. On the contrary, we have received specific information challenging those allegations and stating that they could not be supported by evidence.
There will be an opportunity to discuss this matter in detail. It concerns the Department of Finance as well as the Department of Trade and Commerce and the Department of Transport. But I want to assure the committee now that we have had the charge which has been levelled against this company -that of transporting war material to China -denied flatly by representatives of the company-


Some hon. Members:: Oh, oh.


Mr. Fournier (Hull):: Just wait a minute until the minister completes the sentence.


Lester Bowles Pearson: -and the evidence we have received from other sources also supports that denial. It must be remembered that before the ships can leave Hong Kong, they have to get customs clearance from the government of Hong Kong. It must also be remember'd that regulations are in effect in Hong Kong to prevent strategic material of any kind from going to communist China. It must also be remembered that the Canadian government has regulations to that end, and those regulations have been in effect for many months. And we have done what we can to make sure that nothing of a strategic nature can get to China at this time. I am not going to say anything further about it at this time. But

Supply-External Affairs we will have all the information, and I hope when we get the information it will be quite clear that this government has not connived in any way at shipments of any strategic materials to the Red government of China.
The hon. member in the early part of his speech talked about two of our ships operating in the Yangtze river. There are no ships of Canadian registry or flying the Canadian flag that we know of operating in the Yangtze river at all.


Donald Methuen Fleming: The Minister of Trade and Commerce said so last night.


Lester Bowles Pearson: There are two ships of this company operating on the Yangtze river, but they are not of Canadian registry, or flying the Canadian flag-and that is our latest information.


Mr. Drew:: Let me ask if the minister questions the accuracy of the statement made last night by the Minister of Trade and Commerce.


Lester Bowles Pearson: I tried to tell the committee we are getting as complete and up-to-date information as possible in the matter. We have been in touch with Hong Kong, and that information today is that no Canadian ship of this company or any other company was operating on the Yangtze river.


George Randolph Pearkes: But they have been.


George Alexander Drew: I have asked a proper question, as to whether the Secretary of State for External Affairs questions the accuracy of the statement made by the minister last night.


Lester Bowles Pearson: I will reply when I have had an opportunity to read exactly what the Minister of Trade and Commerce said, and not until then, and not merely to satisfy the curiosity of the hon. member at this time.


George Alexander Drew: Mr. Chairman, I hope the Secretary of State for External Affairs will retain his usual composure. It is not a matter of curiosity. We are dealing with a statement made by the Minister of Trade and Commerce, and I would hope that the Secretary of State for External Affairs does support the proposition we have had put forward so frequently, that the statements of the Minister of Trade and Commerce are to be taken seriously.
At one o'clock the committee took recess.
The committee resumed at three o'clock. Mr. Diefenbaker: I had intended to make some general remarks with regard to the subject before the committee, and I hope to do this a little later on. What happened just before the luncheon recess aroused my curiosity, and there are a number of questions 
I should like to ask the responsible ministers of the crown in connection with the remarkable conditions revealed by the hon. member for Nanaimo when he read from a letter which he had received some days ago. The more one considers the answers given by ministers, the more one wonders just what are the facts.
Last evening the Minister of Trade and Commerce, with his knowledge of matters that affect all departments, went into considerable detail in connection with this curious situation which has arisen as a result of the use made of ships bearing the Canadian ensign and sailing in waters that are certainly not friendly. One cannot say that they are enemy waters; for what is taking place in Korea is not war, but rather the punishment of an international aggressor by the combined conscience of mankind.
This is a curious situation, and one which cannot be answered merely by brushing aside what has been said and making the general observation that when the facts are made available and when the government finally speaks, everything will be proper and everyone will be satisfied. Either the minister has the facts, in which case he can say that the letter read by the hon. member for Nanaimo is not correct, or he has not the facts and is merely drawing upon the hope that when the facts are available there will not be a great deal of foundation to the allegations contained in the letter read by the hon. member for Nanaimo.
Last evening the Minister of Trade and Commerce gave some information. The interesting thing in connection with this matter is that both ministers who have spoken have begun to make excuses. The attitude of the minister of external affairs was that he did not know anything about this until about a week ago. I think the letter was dated June 4. Last evening the Minister of Trade and Commerce indicated that he knew quite a bit about it, but apparently he was glad that he did not know as much as what he was asked to give information on; for he is reported on page 4125 of Hansard, speaking about these ships, as saying:
And they are not my problem, I should say. I had nothing to do with them, except that when they got into difficulty I was called in to try to straighten out the trouble. But they have nothing to do with my department, I am happy to say.
A little later the hon. member for Van-couver-Quadra made a suggestion with regard to the mortgages, and the Minister of Trade and Commerce replied as follows:
It might not be the right thing to do. The Department of External Affairs and the Department of Finance are struggling with the situation. I should not be talking about it at all, because I know very little about it, and1 I have nothing to do with it.

iou see the tremendous struggle that is taking place as to who has the responsibility and what are the facts. The Minister of Trade and Commerce went into details, as he usually does, but this was one time when he said that he had nothing to do with the thing at all, that it was a matter in which the Department of External Affairs and the Department of Finance were engaged in a tremendous struggle. What is all the struggle about? Why all the struggle in this matter? If the facts are known, let us know them.
I am going to ask a number of questions of the minister of external affairs arising out of the glimpse given by the Minister of Trade and Commerce last evening. Last evening the Minister of Trade and Commerce gave a number of facts, but apparently in this struggle the minister of external affairs does not know all the facts that were known to the Minister of Trade and Commerce. I want to get some information from the minister of external affairs in regard to this matter. I read what the Minister of Trade and Commerce said last evening, and I shall now ask a number of questions. The answers are there, because the Minister of Trade and Commerce made it clear last evening.
Who were the two or three Canadian shipyards with which the Ming Sung Company made agreements? On what dates were those agreements made? What was the amount of indebtedness that was guaranteed by the government of Canada in reference to the sale of these ships to the Chinese government or the guarantee by the Chinese government? Who were the banks who started to worry? Last evening the minister said, as reported on page 4124 of Hansard:
All went well until the Chinese government, the government of Chiang Kai-shek, fell, and then the banks began to worry a little about their loan. In the uncertain situation that followed, it seemed wise to transfer the ships to the Canadian flag, which was done at the request of the Ming Sung Company, which expressed a desire to protect their loans in Canada.
Who were the banks? What were they worrying about? How much were they worrying about? This could be cleared up if the minister would just produce the correspondence with the Ming Sung Company which revealed the desire of that company to protect their loan.
Then we go on from there and we find that the minister said:
Whether the ships are carrying contraband in their trips to Canton and up the Yangtze river I cannot say. I hope they are not.
A little later last evening the minister did say that he was assured that they were not by someone in Hong Kong. Yesterday one minister of the crown did not know whether
Supply-External Affairs these ships were carrying contraband. He hoped they were not. Today a minister with less information is able to say that they were not. Was that information received within the last twenty-four hours, since the matter was brought before the house? A little further on the Minister of Trade and Commerce said:
But the government has no direct interest in the situation other than that they are guarantor to a Canadian bank for part of the money that built the ships for the Ming Sung Company.
Further on the Minister of Trade and Commerce said:
When the flag was transferred the ships were exempted from the shipping regulations which required them to be officered by Canadians.
When did this take place? Has this ever been done in other cases? Has a special regulation ever been passed before to permit ships under Canadian registry or flying the Canadian ensign to operate, if not in hostile waters, certainly not in friendly waters?
The minister went on to say:
When they came back under the Canadian flag they were exempted from the requirements.
The question that must be answered for the Canadian people is why that was done. What purpose was there in having these ships flying the Canadian flag under Canadian registry, and exempted from the regulations and requirements applying to Canadian shipping waters as long as they operated in Chinese waters? This cannot be answered by merely expressing the pious hope that some time when the information is available it will be given, and that when it is given it will be information that will be acceptable. This information is available. Remember that the Minister of Trade and Commerce said that one of the two departments having the information, the Department of External Affairs, was struggling with the Department of Finance to find a solution to this matter. When was the order in council passed to do what is most unusual, namely, to allow the Canadian flag to be flown on a ship that is not subject to the Canada Shipping Act? When the minister replies I ask him to say whether this was done by regulation; because he has brought another department into the struggle.
Last night the Minister of Trade and Commerce mentioned only the Department of Finance and the Department of External Affairs, but this morning the Secretary of State for External Affairs brought the Department of Transport into it; so that is another department. Of course they are not engaged in the struggle, because the Minister of Trade and Commerce did not mention them last evening.
4152

Supply-External Affairs


Gordon Graydon: This is no longer a limited war.


John George Diefenbaker: This is a case of each minister limiting his responsibility to some other department, and what we are trying to find out is which is responsible. Was an order in council passed? If so, then it is one of those that I must have missed as they were tabled from time to time by the Prime Minister.
Remember that the Minister of Trade and Commerce said in effect in a very straightforward way last evening: I do not know whether they are carrying contraband; I hope not. The Secretary of State for External Affairs today, in quite a show of annoyance at the hon. member for Nanaimo, said in effect:	Of course they are not. We
want to get the information from the minister today through his setting out the facts, tabling the documents and making the true situation known and not obscuring it by scattering the responsibility to some other department.
This is a most serious matter. The situation in Asia is such that nothing but care and consideration must be given to the end that things will not be done that will be unjustly provocative. Surely we have not come to a situation where a ship flying the Canadian ensign operates in waters that are far from friendly at a time when we are engaged in a struggle against the onward rush of communism, and one minister can say: I hope Canadian ships are not being used to carry contraband, and another minister says: Of course they are not, but we will tell you some time later when we get full information as to what the facts are.
I rise at this time merely for the purpose of suggesting to the Secretary of State for External Affairs that he answer these questions, that he should not endeavour to brush aside the search for information of the hon. member for Nanaimo, but that he place the cards on the table and let the Canadian people know why this has happened, why even today, while we sit here, ships flying the Canadian ensign are operating into communist waters apparently for the purpose of ensuring that certain Canadian creditors will receive their money. That is not a sufficient excuse for this situation.
The minister may have his explanation available now. The one he gave this morning was not in keeping with that given last evening by the Minister of Trade and Commerce, and was one that will far from satisfy anyone, regardless of political persuasion, that all is well when in June of 1951, with the Korean situation what it was, the


government should follow the course of action it has followed in this matter-a course of action which, if not calamitous, was certainly indiscreet. The only explanation given as to the reason why we are doing this unusual thing is the fact that creditors under a mortgage were to be assured of payment. That is not sufficient.
I hope the minister will now be in a position, reinforced as he must be since this morning by further information, to answer some of these pertinent questions. We do not intend to pass by this matter until complete and concrete answers are given to the questions raised by the hon. member for Nanaimo. You cannot get away from the fact that the Minister of Trade and Commerce used these words.


An hon. Member:: Again?


John George Diefenbaker: He said, as recorded at page 4125 of Hansard:
It might not be the right thing to do.
He was referring to a suggestion of the hon. member for Vancouver-Quadra.
The Department of External Affairs and the Department of Finance are struggling with the situation. I should not be talking about it at all, because I know very little about it . . .


Clarence Decatur Howe: I should have said that first.


An hon. Member:: The pleading lawyer.


John George Diefenbaker: That is a jovial and frank answer on the part of the Minister of Trade and Commerce. If he would follow that course in other cases, how much disagreement would be prevented in the house! There is no doubt about that. You will notice that the minister did not make that modest statement until after he had given an answer that is so far out of line with what the Secretary of State for External Affairs said this morning that it demands an explanation; for after all, parliament would never have known.
Everything that was happening would have been kept from parliament and the country if the hon. member for Nanaimo had not discovered a situation which demanded and still demands action. The Secretary of State for External Affairs may laugh, but this situation is too serious to be treated in a frivolous manner. This morning he was annoyed when the matter was brought up. I hope this afternoon he is in a position to give a serious, considered answer to what was a reasonable request on the part of the hon. member for Nanaimo.


Lester Bowles Pearson: Mr. Chairman, the hon.
gentleman who has just taken his seat saw fit to say that I was annoyed this morning when this matter was brought up.


John George Diefenbaker: Just from what you showed.


Lester Bowles Pearson: I was not at all annoyed at this matter being brought up. To use the words of the leader of the opposition, I will admit that I lost my normal composure for a moment, and I did so for two reasons. In the first place the leader of the opposition tried to make it appear that something I was saying flatly contradicted what the Minister of Trade and Commerce said last night. During the noon recess I read the remarks of the Minister of Trade and Commerce in Hansard very carefully, and nothing he said last night was contradicted by anything I said this morning. I suggest that if hon. members compare the two statements when they appear in print, that observation will be borne out. I lost my composure also because I felt the hon. member for Nanaimo was suggesting or leaving the implication-and if I do him an injustice in this I shall be glad to withdraw it-that in some way or other the Canadian government was conniving at a course of action which had resulted in arms being shipped to communist China which might be used against our men in Korea.


George Randolph Pearkes: On a question of privilege, Mr. Chairman, I never used the word "arms" in the course of my remarks, nor did I use the word "connive".


Lester Bowles Pearson: Well, I made a pretty careful note of some of the observations of the hon. member and he said, quoting his words, "This disgraceful trade between the British port of Hong Kong and the communist ports, being carried on by this company through ships under Canadian registry." He also spoke of the people of Canada not tolerating this sort of thing. He talked of eyewitnesses in Hong Kong reporting that essential war materials were being included in those cargoes daily. From those observations I got the impression that he accepted as a matter of cold fact, to use his own expression, the contents of a circular letter-


George Randolph Pearkes: Those were not my words; they were the words of the circular letter.


Lester Bowles Pearson: -which was mailed to him and a good many other people by an interested party, which dealt with this matter and made some damning and serious charges against the Canadian authorities. If those charges were correct, Mr. Chairman, everything that was suggested by the hon. member for Nanaimo would be justified. But may I tell him that we in the government received those charges also and we have not accepted them as being correct, as he seems to have done. In his statement this morning, and I 80709-264J
Supply-External Affairs copied this down, he said: "I will draw the attention of this committee to the situation which I believe exists in Hong Kong today". The situation he believes exists in Hong Kong today is that which is outlined in the letter.
My loss of composure on this, score was due to the fact that the hon. member was willing, as I understood it, to accept those allegations. When we received that circular letter, as I said, this morning, I took it up at once with my colleagues in the cabinet. We came to the conclusion that if this sort of conduct was going on; if any ship under Canadian registry was engaged in this kind of trade; if these charges could be substantiated, we would take action at once to see that it was stopped and the ships taken off Canadian registry or, as the hon. member himself said, perhaps it would be better if they were sunk. No condemnation could be too severe if that sort of action was in fact being taken by this company using ships under Canadian registry. But before we took that action we felt it would be only fair to investigate these charges and see if we could get more substantial evidence than that appearing in a circular letter. So we communicated, as I said this morning, both with the United Kingdom authorities and with our own Canadian official representative in Hong Kong. Already we have received an interim reply from the Canadian trade commissioner casting very grave doubt indeed upon these allegations. We will be receiving full information very shortly, I hope. We have asked him to make a complete investigation. We have been in touch with the officers of the company and have received from them an authoritative denial that any such practice is going on.


John George Diefenbaker: What are they shipping?


Lester Bowles Pearson: As a matter which bears on their denial and as an argument in favour of the validity of their case, it should be pointed out that ships cannot leave Hong Kong for communist China which have not been cleared by the Hong Kong authorities.


John George Diefenbaker: What are they carrying?


Lester Bowles Pearson: The regulations also prevent the shipment from Hong Kong of any strategic materials on a list we have drawn up with the governments of the United States, the United Kingdom and others of the United Nations. We have also been offered copies of the manifests of the cargoes leaving Hong Kong on these ships, those that have left in the past or those that may be leaving in the future, as an evidence of their good faith in this matter. We are not accepting that as a complete investigation. We want

Supply-External Affairs to make an independent investigation ourselves, and we are trying to do that. But I suggest that until that investigation is completed it is not fair to accept the charges in this circular letter; and we do not yet accept them.
The hon. member for Lake Centre, who wants the facts on this matter-and he is entitled to them-said, and I assume he stated this as a fact, that this morning I said these ships were not carrying contraband and thereby contradicted some of the remarks made last evening by my colleague the-Minister of Trade and Commerce. I did not say this morning that these ships were not carrying contraband. This is what I said, and I quote from the report;
So far, although our information is not complete, we have not received any information which would justify the allegations made in the letter to which my hon. friend has referred.
And I went on;
On the contrary, we have received specific information challenging those allegations and stating that they could not be supported by evidence.
That is as far as I am willing to go now. When we receive further authoritative information it will be submitted to the house. On the basis of that information the government will know what action should be taken and will take that action. I suggest that is a proper course to follow in this matter. We are not trying to hide anything at all from the house. The hon. member for Lake Centre referred to a struggle between my department and trade and commerce regarding this matter.


John George Diefenbaker: No; a struggle between external affairs and finance.


Lester Bowles Pearson: Well, he referred to a struggle between some of the departments of the government.


John George Diefenbaker: That is what the minister said.


Lester Bowles Pearson: If there is any struggle
between government departments in this matter it is merely that we wish to vie with each other to give the most complete, authoritative, and unbiased information. Four departments of government are involved. There is the Department of Finance, the Department of Trade and Commerce, the Department of Transport, and the Department of External Affairs, all of which have a legitimate and very real interest in this question, and from all of which information will have to be obtained to answer, in the way they should be answered, the eleven questions which have now been addressed to me on this subject. Before the completion of the discussion today I hope to have answers

to most of those questions, if not all. During the lunch hour, or what should have been the lunch hour, I did manage to secure some information in regard to the questions asked by the hon. member for Nanaimo. I have not got the complete information concerning the additional questions asked this afternoon. I hope to have it soon, and when I do I shall be very glad to submit it to the committee.


John George Diefenbaker: This does not require any intensive mental struggle in order to get the information. At this stage I ask the minister if he can produce the regulation or order in council that must have been passed at the time these ships came under Canadian registry and after the transfer, which exempted them from the requirements of the Canada Shipping Act so long as they operated in Chinese waters. That is information which he must have available at the moment. I am not saying he has the other information now, but that would start to clear up the situation.


Lester Bowles Pearson: Well, Mr. Chairman, that is information which should of course be given to the house by my colleague the Minister of Transport. That is one of the things we have been looking into, and in a sense it was included in the questions asked this morning by the member for Nanaimo. If the committee so desires, I shall give all the information I have been able to acquire within the fairly limited time I have had to deal with these questions which were asked before lunch.
These questions, as I took them down, were as follows; The first one was, when were the two ships on the Yangtze delivered to the Ming Sung Industrial Company? As has been brought out in the discussion, two of the Ming Sung ships have been operating on the Yangtze, and five have been operating out of Hong Kong. The two ships now on the Yangtze river were delivered to the Ming Sung Industrial Company, and were moved to that river some time ago. At that time the Chinese civil war had not reached that area. During 1949 the communist forces overran that part of China which included the Yangtze river, and the vessels have since been in the area administered by the communist authorities in Peking.
The second question-


George Randolph Pearkes: May I ask whether they are still operated by the Ming Sung Company?


Lester Bowles Pearson: As I understand it, Mr. Chairman, those ships are still operated by the Ming Sung Company, but they are not operated under Canadian laws or flying the

Canadian flag, nor have they any association with Canada at all. They are operated now by the Chinese as Chinese ships.


George Randolph Pearkes: It is the same comapny as bought the vessels earlier?


Lester Bowles Pearson: I am informed that is correct, it is the same company.


George Randolph Pearkes: Then this company trades not only between Hong Kong and Canton but within communist China itself?


Lester Bowles Pearson: This company, as I understand, has ships operating on the Yangtze river which is now under communist control.
The second question was, did the Canadian government make any protest at the taking over of these ships? My answer to that would be, Mr. Chairman, that Canada had no ground upon which to make a protest because the ships were not Canadian property, nor were they of Canadian registry.
The third question was, are they still being operated by the Ming Sung Industrial Company? I have already answered that in the affirmative. The fourth question, does that company maintain agencies throughout communist China? My information is that it does. The fifth question, on what authority were these ships' officers and crews given exemption from merchant shipping regulations, was it ministerial or by order in council? This deals with a point raised by the member for Lake Centre. By "these ships" of course are meant the five ships operating out of Hong Kong which are under Canadian registry. It is meant to apply to those ships only, and not the ships on the Yangtze as they are not under Canadian registry. The answer would be in part as follows, although I would ask permission, Mr. Chairman, of the committee to add further details to this answer as I receive those details, if they add anything to this answer.
My tentative answer would be that two separate exemptions are involved in this matter, one granted by the Canadian government to exempt the ships from the requirements of the Canada Shipping Act that they must have British certificated officers and crew. I believe that exemption was given by the Minister of Transport under authority conferred on him by statute. I believe I am correct in saying that.


Mr. Green:: By which?


Lester Bowles Pearson: By statute. The second
exemption was granted to these ships by means of an order of the governor of Hong Kong in council under section 19 (a) of the merchant shipping act of 1899.
Supply-External Affairs


John George Diefenbaker: What is the date of the Canadian exemption?


Lester Bowles Pearson: I have not the date of the Canadian exemption, but I shall be glad to get that as soon as I can.
The sixth question was, how much money is still to be paid? The answer to that is the total amount of the principal of the loan is still to be paid, namely, $12,750,000, and interest payments of about $90,000 per quarter. The seventh question was, what payments have been made to date, and by whom? I have not been able as yet to secure that information from the Department of Finance. I give those answers at this time to show the committee I am anxious to get all the information I can, and give it to the committee as quickly as possible. I shall add to this information as soon as I am able to do so.


George Randolph Pearkes: I appreciate the information which has been given by the Secretary of State for External Affairs. I am sorry that my questions caused him to miss his lunch today. There is still one question which has not been answered. I do not know whether the minister is in a position to do so, but the fact has now been established that these vessels, flying the Canadian flag and under Canadian registry, are conveying passengers and cargo between the British port of Hong Kong and communist ports like Canton and others. The question as to whether there is contraband of war, arms, equipment or other materials or supplies on board cannot be solved. The report from a person whom I believe to be a reliable officer of a guild of ships' officers is contained in the letter which I quoted, and is to the effect that eyewitnesses state there are essential war materials in the cargoes. It is uncertain whether or not that is so. The advice received by the minister from the officials of the Ming Sung Company is, I presume, that they are not carrying any. I should expect them to say that. I am not surprised at that denial at all.
The Canadian government officials there have not been able to advise the minister definitely as to what supplies are being carried. If the minister has any information as to the type of cargo which is being carried to communist China by these Canadian vessels I should be pleased to receive the information.


Howard Charles Green: Mr. Chairman, in his remarks a few minutes ago the minister intimated that there had been some certificate of exemption given by the Minister of Transport. I wonder if it would be possible for the
4156	HOUSE OF
Supply-External Affairs minister to get further details of that certificate, not only the date upon which it was given but also under what sections of the Canada Shipping Act? There are certain powers given under the Canada Shipping Act to the minister, but there are also powers which must be exercised by the governor in council. I should like to know whether this particular power is under the one or the other category. It would appear that what was given was a blanket exemption, something which, I submit, was never the intention of the Canada Shipping Act. I am quite positive that it was never intended that any minister of transport could exempt all the officers of five ships belonging to a company, as would appear to have been done in this case.
May I also ask the Secretary of State for External Affairs if he can' tell the committee what control the Canadian government now has over these five ships plying out of Hong Kong? They apparently are flying the Canadian flag; they also have it painted on the sides of the ships; and they are no doubt getting special treatment because of the fact that they are so doing. Yet it would appear that Canada has absolutely no control over these ships. Last night the Minister of Trade and Commerce, speaking on that point, as reported at page 4124 of Hansard, said as follows:
While they are Canadian flag ships they are not in any way subject to the direction of the Canadian government.
They are not owned by the Canadian government. We can withdraw the flag, and that is about all we can do. But the government has no direct interest in the situation other than that they are guarantor to a Canadian bank for part of the money that built the ships for the Ming Sung company.
If that statement by the Minister of Trade and Commerce is correct, we have the situation that here are these five ships in Chinese waters using the Canadian flag, having officers and crew completely non-Canadian, and under no control whatever by the Canadian government. Surely that is an extremely unwise position for Canada to permit to arise. We should certainly withdraw from that company the use of the Canadian flag, if the facts are as indicated by the Minister of Trade and Commerce. I would ask the Secretary of State for External Affairs to let us know whether or not that will be the policy of the Canadian government if those are the facts, namely to withdraw the use of the Canadian flag from that company. If the Canadian flag is not to be withdrawn, why can this situation not be cleared up, as I suggested last night, by having the five ships seized and sold under the mortgage? Apparently there are ships' mortgages on each one
tMr. Green.]

of these ships. They are operating out of a British port, namely Hong Kong.


Clarence Decatur Howe: The mortgages are not in
default.


Gordon Graydon: They certainly would be if they are working for the communists.


Howard Charles Green: That would, of course, depend on the terms of the mortgages. But I would think that if this company is breaking any of the terms of the mortgages, the ships could be seized and sold. But surely we cannot allow this situation to continue if the Canadian government has any authority over these ships.
There is a power which was given under the amendment to the Canada Shipping Act, by chapter 26 of the statutes of 1938, which enables the Canadian government to prohibit the shipment of articles of war. I understand that, under that particular provision-if they are Canadian ships-rand we know that they are registered as Canadian ships-this government has not only the power but also the responsibility to step in and prohibit the carrying of articles of war on any of these ships. I would ask the minister to have this particular amendment checked. I feel confident that he will find that what I have said is correct, namely that Canada is given the power to prevent the shipment of articles of war on a Canadian vessel, even though that vessel may be in a port on the other side of the world.


Mr. Lesage:: You must prove that it carries materials of war.


Howard Charles Green: That would not have to be proved to carry out my suggestion. The government could prohibit the carrying of articles of war on those particular ships.


Lester Bowles Pearson: We have done that.


Howard Charles Green: There is no evidence that that has been done. If it has been done, let the minister tell the committee when it was done and in what way.


Lester Bowles Pearson: Mr. Chairman, as to the information that the hon. gentleman asks for in regard to the action taken by the Minister of Transport, may I say that we can of course get that. He raised the question of what control we had over these ships. The Minister of Trade and Commerce said last night, of course, that we have no physical control over those ships any more than we would have physical control over any Canadian ship operating out of non-Canadian ports. I am not, of course, a lawyer, Mr. Chairman, but we have legal control over those ships at all times. If they break our regulations the government can and will take the necessary action by seizing the ships or

allowing them to be surrendered; and no financial considerations will stand in the way of that action. But I suggest, Mr. Chairman, that we have to get evidence first to the effect that they are breaking our regulations; and no such evidence has yet reached us which we have been able to verify. Under our export regulations-and my colleague the Minister of Trade and Commerce will be able to confirm this-it would be an offence to ship to communist China strategic materials on a list which has been agreed on. If these ships were breaking those regulations, we would be in a position to take action which would stop that sort of thing, and would indeed desire to do so.


John George Diefenbaker: What would be the
action?


Lester Bowles Pearson: We could seize the ships.


Howard Charles Green: Is it the intention to allow those ships to continue under Canadian registry, operating, in one case it is said, with a Russian master and in all cases with a Chinese crew? Is it the intention to continue to allow that? The Minister of Transport may have granted a certificate some time ago, but now that this case has come to light I suggest that any such certificate should be cancelled. If these are to be Canadian ships, they should be manned by Canadian officers and Canadian crews. Then the Canadian government will have some control over what they do. The minister has said that once a Canadian ship is in a foreign port, we have no control over it.


Lester Bowles Pearson: No physical control.


Howard Charles Green: Under the terms of the Canada Shipping Act the Department of Transport has extensive control over a Canadian ship, no matter where it may be in any port in the world. The foolish part of this whole situation is in allowing five ships to operate into communist China under a Canadian flag but with a crew made up of people, of whom I think some at least can be taken as being on the other side in this present international trouble. That is a very unsound policy for Canada to adopt. It is quite evident it has only been done in an attempt to save the Canadian government from having to pay some money under a guarantee pursuant to which these ships were originally built. I do urge upon the minister to give the whole situation further consideration. It should not be allowed to drift along in its present form.


Gordon Graydon: May I say to the minister that I think it will be a very startling shock to most people in Canada to know that by some act of the government we now have this scandalous spectacle if this is true: by some relaxation of the regulations with respect
Supply-External Affairs to the shipping act we now have a Russian captain on a Canadian ship flying the red ensign.


John George Diefenbaker: And something more by reason of the fact that the United States may be patrolling those areas. I would like to ask the minister this question: What difference does it make to the security of the Canadian government for the recovery of $12 million that is owing, that it keeps this ship under Canadian registry and flies the Canadian flag? What is the advantage? A while ago he said in effect "We have no physical control over that -boat when it is in the east".


Howard Charles Green: Five boats.


John George Diefenbaker: Yes, five boats. "We have no control". What was the reason for the Ming Company asking the privilege of using the Canadian flag on that boat-because it was the Ming Company that did so, according to the Minister of Trade and Commerce. He said last night:
It seemed wise to transfer the ships to the Canadian flag, which was done at the request of the Ming Sung Company, which expressed a desire to protect their loans in Canada.
What difference to the protection of their loans in Canada, whether it was flying one flag or another? You see, the difficulty about the whole thing is that we have no information as to what they carried. I asked the minister what they carried, but we have no information as to why these ships operated in those waters. Why did these ships operate under the Canadian flag? What was the reason for that? It certainly did not give security to the Canadian government or for the bank getting the money. Surely we have not reached the position internationally where we are going to allow communists-these Chinese would be communists operating in that part-and with a Russian captain in one case, to enjoy the privilege of operating under the Canadian flag. We have come to an awful situation when we place our flag in the position of being the protector of such people. What justification is there for this kind of conduct?
I wish to see the Canadian flag flown on Canadian ships, but I certainly do not want to see it flown on a ship operated by a crew of communists, enjoying the protection of the Canadian flag and all it means.
After all, our flag means more than that. I ask the minister this specific question: What method of mental gymnastics was followed for the government to arrive at the conclusion that the request of the company to be allowed to use the Canadian flag should be finally acceded to? Will the minister answer that?
4158	HOUSE OF
Supply-External Affairs


Lester Bowles Pearson: Well, Mr. Chairman, the hon. member has made some statements which no doubt he can verify by facts at his disposal, but they are not at my disposal-the fact that one of these ships was under a Russian communist captain and that the crews are communist crews.


John George Diefenbaker: I said that was the evidence given.


Lester Bowles Pearson: That is the statement the hon. member made. On the basis of that he has asked a question. My information does not verify that there is a Russian communist captain in control of a ship.


John George Diefenbaker: Is a Russian captain
on one of the ships?


Lester Bowles Pearson: I do not know.


An hon. Member:: You should know.


Lester Bowles Pearson: The hon. member has been getting a lot of information in the last hour. I hope to have even more in the next hour or two. This committee should realize, and no doubt hon. members do realize, that trade with China under present circumstances, if it was ordinary trade, is not unlawful, if that trade does not involve the carrying of strategic materials. The ships of a great many countries of the world are carrying on Chinese trade at the present time. There is no embargo upon trade with China. Whether there should be or should not be such an embargo is a question of policy. But at the present time there is no such embargo.
Therefore when the hon. member conjures up a picture, which is not a very pretty one, of action taken by the use of these ships to protect those ships from United States naval patrol, which was the expression he used, that is not a very accurate picture.


John George Diefenbaker: What is the reason
for it?


Lester Bowles Pearson: The United States naval
patrol could not have any concern with ships carrying goods to China which were not on the strategic list; and we have been told that these ships were not carrying such goods.


John George Diefenbaker: I ask the minister this
question:	Why was it agreed to by the
Canadian government that these five ships should carry the Canadian flag? What was the advantage to Canada or to anyone else to grant that permit, under the circumstances? That is a question I wish to have answered.


Lester Bowles Pearson: Well-


John George Diefenbaker: And when was it done?


Lester Bowles Pearson: The only answer I can give, and I will pass it on to my colleague the


Minister of Finance, is that the action was taken at the time it was taken to protect the interests of the Canadian taxpayers in respect of this loan.


George Alexander Drew: Mr. Chairman-


Some hon. Members:: Oh, oh.


George Alexander Drew: -the minister has given the most conclusive evidence in support of the suggestion that has already been made that the government should announce without further delay that they are withdrawing the right to use the Canadian flag on these ships. The minister has said that he does not know whether there is a Russian officer or not. If the minister does not know, then that means that the government has accorded this special exemption for ships flying the Canadian flag without knowing who the officers are. If that is not the most severe condemnation of the manner in which this government has dealt with this important subject, then I find it difficult to know what more conclusive evidence could be given.
But there is an important aspect to the matter to which the minister seems to attach great importance. It has come up several times, along with the question as to whether war materials are being shipped. It is a question as to the accuracy of the statement that was read into the record. Now, in so far as that statement is concerned, apart from any expression of opinion contained in that statement, which came from Hong Kong, evidently the only things in doubt are as to whether the captain of one ship is a Russian and as to whether or not they are carrying war materials.
But I submit that those are only incidental details. What has been admitted, and admitted without reservation, is that the Ming Sung Company is trading in communist China. The Secretary of State for External Affairs has stated it has agencies throughout China. It is doing business in communist China, and for all practical purposes it is a company acceptable to the communist government. And that is the company to which, without any knowledge as to who the officers are, we have accorded the special privilege of flying the Canadian flag for the protection of their nefarious business.


John George Diefenbaker: And at their request.


George Alexander Drew: And at their request, without
sufficient evidence even to inform this house as to one justifiable cause for the most unusual exception they have made in this instance-and this at a particular time when, to the regret of all thinking Canadians, the number of ships under Canadian registry is diminishing. At a time like that we find that

this government has accorded this privilege of having those ships under Canadian registry, but under officers not even known by name or nationality to the Canadian government, and according them that special privilege. The Secretary of State for External Affairs could end this debate by simply assuring the committee without further delay that the government will withdraw immediately the right to fly the Canadian flag and will take appropriate steps to recover possession of these ships which they know they can take once that flag is withdrawn because the ships will then not be able to operate in the way they are now under the protection of the flag.
There is a perfectly obvious reason why they have made the request. It is to the advantage of this company with agencies throughout communist China. The conduct of the government in this case displays a strange willingness to afford additional opportunities to communist China to obtain supplies over which we have no supervision beyond the certificate that is given at the time of departure from Hong Kong.
There is another point in regard to this. When the minister says that there is an agreed list of things which may be shipped he is well aware that there has been considerable discussion in connection with supplies that are being run from Hong Kong to communist China. There has been a certain amount of disagreement between some of the governments associated with us in this common cause as to the things which should be permitted to go to communist China. Rubber is certainly one material, and yet we know that rubber has been going to communist China along with other materials that are of assistance to a country engaged in war activities. Whether or not those things are on the list, we know from discussions that have taken place that there is great concern about the delivery of things to communist China which might assist them at the very time they are sending troops to Korea to fight troops that we along with other nations of the United Nations are sending there.
Without the necessity of waiting to find out what is actually being shipped, without the necessity of checking in every detail, I submit that the evidence before this committee demonstrates that no matter what the circumstances were that led the government to this decision, the decision was unwise and should be withdrawn. I am sure that the minister would find agreement on both sides of the house if he would announce this afternoon that without further delay that will be done. I urge him, with the facts before him, not to wait longer to give that 80709-265
Supply-External Affairs statement, and then to take the appropriate steps to obtain the security which will be obtained by the possession of the ships themselves.


Agar Rodney Adamson: I should like to ask the
minister just two questions in this regard. During the last war the false flag device was used extensively. When the United States was still neutral and the neutrality act still in force there was a desire on the part of many United States shipping interests to help the cause of Great Britain. They re-registered a great number of their ships under the Panamanian flag. This was purely and simply a device to get around, not only international law but the United States law which had been passed specifically to prevent trading with any belligerent.
I suggest that the reason these ships are under Canadian registry is the same as that which caused United States ships to be placed under Panamanian registry during a certain period of the last war. That reason was simply to carry on trade which would be illegal flying the flag of the nationals who were running the ships. On the evidence we have heard and on the facts as admitted this trade must be carried out under the protection of the Canadian flag. To carry it out under the flag of communist China, of nationalist China or of any other country would be dangerous and undesirable in some ways. The use of a false flag is well known. Every rumrunner and contraband runner has used it from time immemorial. It is a shock that the Canadian flag should be used in this way.
The cargoes leaving Hong Kong on these ships can be screened; they may be essential foodstuffs or other materials not on the contraband list, but once a ship has cleared Hong Kong there is nothing to prevent it visiting a neutral port such as Portuguese Macao and picking up contraband material and then running along the coast, almost in the protection of the coastal waters, to a communist port. I do not say that that has happened, but that is the sort of thing that the old pirates used to do along the China coast. Coastal waters are particularly difficult to search. For many years the running of arms up and down the China coast reached tremendous proportions. During the civil war in China ships had to be specially protected to prevent seizure when avelling along the China coast by means of grille work to separate the crew from the passengers and prevent the passengers seizing the ship. It has happened over and over again. Once a ship has cleared Hong Kong under the protection of the Canadian flag there is practically nothing to prevent that ship visiting a neutral

Supply-External Affairs or other port along the China coast, picking up contraband arms and running them into a communist port.
These are things that we would like to know from the minister of external affairs. Surely we have agents in Macao and elsewhere who could discover these facts. The thing is extremely suspicious, to place the very kindest interpretation upon it. Were we in the position of the Chinese communists and could use the flag of our enemy for our own purposes, I am sure we would do so. It was done during the last war by using the Panamanian flag, and this seems to be a similar device used to trade with countries where normal trade is restricted or prohibited by national or international law.


Mr. Fulion:: There is one thing about this matter that puzzles me very much. When the minister was referring to one of the statements made by the hon. member for Lake Centre, he said that the member had made an assumption concerning which the minister did not have evidence that in his opinion would support it, and that on the other hand he did not have evidence at the moment to refute it. It had reference to the statement made in the letter read earlier that one of these ships at least has a Russian captain. My understanding is that the Canada Shipping Act-and these ships are under Canadian registry-makes it obligatory upon the owner of a ship under Canadian registry to furnish a register showing amongst other things the name of the master of the ship. I believe that is section 22 of the Canada Shipping Act.
The minister himself may not have that, but I really cannot understand why, inasmuch as this discussion has been going on since before lunch and the minister has told us he has asked the Department of Transport for certain information, that information is not available and is not given to the house. It would be so easy not to leave it on the basis of supposition. As the minister says, he has no evidence that would establish it, but it should be so easy to produce evidence that would refute it if the statement is not correct. I would ask that steps be taken immediately to obtain that information which must be on file in the Department of Transport. Can the minister not let us have that information immediately?


George Randolph Pearkes: Can the minister give me some information as to the date when the Ming Sung Industrial Company of Canada was set up? I believe it was only granted federal letters patent in March of 1950. If that is so it would appear that it was set up solely for the purpose of assisting in the repayment of the money from the Ming Sung


industrialists of China, that it is merely an affiliated company established for that one purpose. So far as I know-and I think this was established by the statement made earlier this afternoon by the minister-none of the principal on the original loan of $12,750,000 obtained by the company under the Export Credits Insurance Act has been repaid, and only the interest on the principal has been paid. I hope that the minister will be able to correct me if that is not so.
I should like to kr.ow when the letters patent were issued for the Ming Sung Industrial Company of Canada, whether it is a fact that they were issued in March of 1950 at the time the Korean trouble was first beginning, and whether there is nothing paid on the principal. I should like to endorse what has been said by the hon. member for York West in this respect. I believe the triangular trade between Hong Kong, Macao and Canton was only established by the Ming Sung Company after the trouble in Korea started. That would suggest that they were able to leave Hong Kong and go to Macao. What check would there then be, other than possibly through the Portuguese authorities, as to whether there was contraband taken on these vessels and carried by them to Canton?


Lester Bowles Pearson: As to the information asked for by my hon. friend, I have already asked the Department of Finance for all relevant information on that point. I will give it to the committee as soon as I get it from the department.


George Randolph Pearkes: That will include when the company was established?


Lester Bowles Pearson: That is right.


Edmund Davie Fulton: What about the information as to the name of the master? Is that information not immediately available from the Department of Transport?


Lester Bowles Pearson: The matter of the information as to the name of the master and the officers is also being looked into, and I hope very much that the Minister of Transport will be here shortly.


Mr. Stewart (Winnipeg North):: I should like to get into the act but not in this particular scene. If anyone has anything else to ask about the Ming Sung Company I will take my seat.


Howard Charles Green: I should like to ask the minister to find out at the same time where these five ships are registered and the dates upon which they were registered.


Mr. Harkness:: There are two or three questions I should like to ask arising out of some of the answers the minister has given.

Ke said that the Canadian trade commissioner in Hong Kong had been ordered to make a full investigation. When was he ordered to make a full investigation? As to the principal sum of $12,750,000 still to be paid, has the Canadian government guaranteed the whole of that? I think the Minister of Trade and Commerce said it was guaranteed jointly by the Chiang Kai-shek government and our own government. What I should like to know is whether Canada is responsible for the whole $12,750,000 if it is not paid, and to whom we are responsible, what banks, commercial shipping companies, and so on?


Lester Bowles Pearson: All this financial information, including the point that has been raised by the hon. member for Calgary East, will be secured very shortly. On the first question I can assure him that within twenty-four hours of the receipt of the first charges against this company a telegram had reached Hong Kong asking for a complete investigation, but before that telegram reached the trade commissioner in Hong Kong we had already received a telegram from him on his own initiative giving us certain information concerning this matter because he had already heard that this letter was coming to us from Hong Kong.


Mr. Browne (St. John's West):: Does the minister intend to give the history of the ships since they left Canada, when delivery was taken of them, the names of the ships, when they reached Hong Kong and when they went up the Yangtze? I think we already have some information on that point. Did we receive any report from the Canadian trade commissioner in Hong Kong as to the activities of these ships very much before this letter was written on June 4?


Lester Bowles Pearson: I will have to look into that. I have not that information, but it is information that can be secured.


Howard Charles Green: The Minister of Transport is now in the house. Perhaps he could deal with the questions that have been raised affecting his department.


Mr. Chevrier:: I have just been told that the questions were raised, and I do not know exactly what they are. Perhaps I could get them from the Secretary of State for External Affairs and deal with them in a moment.


George Alexander Drew: Would it not be best to allow this item to stand in view of the fact that the minister has certain further information to obtain? The other items could be dealt with, and then it would be possible to return to this general item at which time any discussion regarding this matter or further general discussion could then take place.
Supply-External Affairs


Lester Bowles Pearson: I would be grateful for that consideration, but possibly we could go on with the general discussion except for this particular subject and return to it when I am able to give the information that has been asked for. The first item is a general item which covers almost anything under external affairs.


Alistair McLeod Stewart: If we have finished with this Ming Sung business I should like to refer to the question of the peace treaty with Japan. I agree with those who have said that it is just as well to get this treaty signed and sealed, even though the circumstances may be somewhat unsatisfactory. We have reached the stage where, if it is to be done at all, it should be done quickly. Obviously the position of Russia is the same old argument disguised in different words, and if we should accept their views we would find ourselves in the same mess we have in Europe. It is quite obvious that certain basic differences between the United Kingdom and the United States have not been removed, but a very interesting formula has been adopted under which there is an apparent compromise. I cannot recall a case in recorded history, however, in which a defeated country has been able to name the government with which it will negotiate a peace treaty. That is a precedent which offers some very interesting possibilities.
I have just a word to say on the situation in Japan itself and what may be the effect of a peace treaty. Some time ago a well known general said that what had happened to Japan was the greatest reformation recorded in modern history. I may have some regard for the military ability of that general, but I have not very much regard for his political sagacity. He has fallen into the error common to many of us. We simply cannot take our democratic customs and habits and impose them upon other peple in a matter of a few short years. We can make no greater blunder than to believe we can do that. What has happened is that in Japan today there is a veneer of democracy. I am certain the situation, is better than it was under the authoritarian state of 1939, but I am quite sure that once Japan regains her sovereignty even such measure of democracy as she has now will be appreciably lessened.
The question which interests me is this. There are in Japan at this moment about six million workers organized in trade unions, with more or less the same rights which we accept as normal in this country. The indications now are that many of these rights will be taken away, and many of the democratic practices which have been thrust upon the Japanese will disappear once that treaty is

Supply-External Affairs signed. I should like to know whether the treaty contains any safeguard to assure that at least some of these rights will be retained by the Japanese.


Lester Bowles Pearson: I do not think I can say very much more about the contents of the proposed Japanese peace treaty than I have said already. The final draft has not yet been submitted to us. We have had a report from London that some of the differences between the United Kingdom and the United States have been resolved. Whether or not they have been resolved in a satisfactory way I am not in a position to say at the moment. As I said this morning, we have also been informed that a composite report will be submitted, and we will be asked for our observations on that preparatory to the signing of a Japanese treaty. I appreciate the point made by my hon. friend about the inclusion in the draft of certain safeguards which would guarantee democratic rights, freedom of assembly and that sort of thing; and while I do not want to go into the details now for obvious reasons I think I can say that matter has been taken into consideration in the discussions that have taken place.


Edmund Davie Fulton: I noticed in the press last evening a dispatch concerning the forthcoming conference of defence ministers in London. I am reading from the Ottawa Journal of last evening; and the dispatch states:
Canada is naming her top diplomatic and military representatives in London to attend the commonwealth defence conference to be held there late this month, it was learned today. Dana Wilgress, high commissioner, and Major General S. F. Clark, head of the military mission, assisted by S. F. Rae, first secretary under Mr. Wilgress, will attend the conference as observers.
I wish to inquire first whether the report is accurate as to the persons who will attend, and second, whether there is any particular significance attached to the words "will attend the conference as observers". Does that mean, as it would appear at first sight, that Canada is not going to participate fully in the conference but is merely going to be there in the role of an observer?


Lester Bowles Pearson: I think a statement on this matter was made in the house not long ago by the Prime Minister. The conference in question, which I believe is opening in London next week, is a conference of certain commonwealth governments who in the past have been especially interested in Middle East defence questions. This matter came up at the conference of prime ministers last January, I think. It was discussed there, and at that time it was agreed that the discussion should be continued at a special meeting of the defence ministers of the United Kingdom,


Australia, New Zealand and South Africa. At that time the Prime Minister indicated that while of course we are interested in all defence questions, since this was a regional conference devoted to problems of particular interest to those members of the commonwealth and not of special interest to Canada, we would be attending not as full members but as observers; and that is the situation at the present time. The conference opens next week. We will be represented in an observing capacity by our high commissioner and senior military and political officials from Canada House.


Gordon Graydon: When the minister is there next week does he expect to attend any meetings of this commonwealth conference?


Lester Bowles Pearson: No, I do not expect to be attending that particular conference, though I should think I would be attending a number of meetings in London next week.


Edmund Davie Fulton: I understood the minister to say this conference is particularly concerned with middle eastern defence problems. Canada and the United Kingdom are the only members of the commonwealth who are also members of the Atlantic pact. What about the position of Greece and Turkey?


Lester Bowles Pearson: As far as I know that question will not be discussed at this commonwealth meeting. The proposed agenda, which is still confidential, does not indicate that any such question will be up for discussion. This is a meeting of commonwealth governments interested in commonwealth defence co-operation in the Middle East area. The question of Greek and Turkish adherence to the Atlantic pact, or association with the Atlantic pact, is of course a very important matter which is now under serious discussion. I should think that would be on the agenda for the next meeting of the North Atlantic council.


Edmund Davie Fulton: I am not going to take immediate issue with the statement of the minister because I do not feel qualified1 to do so; but I will say that Canada, together with all the countries in the world, must be concerned about the defence of the Middle East, as we must be concerned with the restraint of aggression everywhere in the world. That would be my view, though as I say I do not feel qualified to engage in a debate with the minister on that subject. I will put this to him, that in view of the situation which is developing in Iran and the Middle East I hope it will be easy, should it become desirable in the view of the government to do so, to change our role from that of observer to a full

participant, and I hope the minister will say no obstacle would be placed in our way should we desire to take that step.


Lester Bowles Pearson: If conditions made the alteration of our status desirable there would be no difficulty about making the change. I do not know whether it will be either necessary or desirable, but if it should become so we will be able to change our status without any trouble.


Alistair McLeod Stewart: I realize that the lunch hour does not afford much time to obtain information, but will the minister tell us whether he has anything to say on the Council of Europe?


Lester Bowles Pearson: Yes, I was able to get that information, at least, during the lunch hour.
I should have remembered this morning when the subject came up that a day or so ago a message came from the president of the Council of Europe, Mr. Paul-Henri Spaak, through our ambassador in Belgium, asking me to convey to the Speaker of the House of Commons an invitation for this parliament to be represented at the next session of the Council of Europe in Strasbourg, I think in September. I have just sent that invitation on to Mr. Speaker and suggested, though perhaps I had no particular right to do so, that he might feel inclined to take up this question with parliament as quickly as possible.


The Chairman:: Is it agreed that the general discussion be concluded at this time?


George Alexander Drew: Mr. Chairman, in making the suggestion I did, I also had in mind the fact that some further remarks I wish to make will be related partially to the answers that will be given. In making this suggestion, it was not my thought that we should then be limited strictly to a discussion of this subject, because other remarks I propose to make are related to it. I make that reservation at this stage in agreeing to the conclusion of the discussion.


Joseph-Alfred Dion: With that reservation, is it agreed that the general discussion be concluded?


Some hon. Members:: Agreed.
86. Representation abroad-operational-including payment of salaries of high commissioners, ambassadors, ministers plenipotentiary, secretaries and staff appointed as directed by the governor general in council, notwithstanding anything to the contrary in the Civil Service Act or any of its amendments, $4,492,816.


Alistair McLeod Stewart: Mr. Chairman, I have something to say on this item.
Supply-External Affairs On more than one occasion the members of all parties in this house have stated how pleased they were with Canadian representation abroad. I find it a rather pleasant change to state that I am not at all satisfied with one aspect of it. Any hon. members who have been in the United States realize that there is a certain lack of knowledge about Canada which exists in that country. If we are to judge from a recent survey conducted by the New York Times, I would say there is a fair amount of ignorance concerning us. I was in Washington recently speaking to some men in responsible positions who were quite poorly informed as to what Canada had been doing in participating in the United Nations action in Korea. I was quite disappointed, and indeed alarmed, at the lack of knowledge which seemed to prevail.
I can only see one way out of it. Obviously the officials in our embassy at Washington do not have the time to do the sort of job which ought to be done between the embassy and the capitol. I am wondering if it is the intention of the minister or the department to create a new position as soon as possible, let us say some sort of liaison position between the embassy and the capitol to keep Americans in official positions more fully informed as to what Canada is doing.


Lester Bowles Pearson: Mr. Chairman, I do not suppose any member of the committee is more aware of that problem than I am, having served both in Washington and in Ottawa. It is a matter to which we have been giving very active consideration in the department, and in that connection we have noted with considerable interest the chapter of the royal commission report on arts, letters and sciences devoted to the better understanding of Canada abroad, and the ways and means of achieving that. I believe that is a very important objective to be achieved. I for one, Mr. Chairman, am not at all satisfied with what we have been able to accomplish. Within the limits of the resources made available to us by parliament we do the best we can, but I hope we shall be able to strengthen that kind of representation abroad, representation devoted more particularly to the increasing of information about Canada in foreign countries, especially the United States of America. At the present time we are giving consideration to ways and means of strengthening the staff of the Canadian embassy in Washington in that direction. I hope we shall be able to do something in that regard before very long.


[Stage Direction]
Item agreed to.
4184	HOUSE OF COMMONS
Supply-External Affairs
100. World health organization, $231,200.	is the budget for carrying on the activities
Mr. Wright:: 
Lester Bowles Pearson: Mr. Chairman, this vote appears to indicate a very substantial increase in our contribution to the world health organization. I believe the increase is due to the fact we have been asked to make this contribution available at this date. It is in fact a matter of dates. Possibly I may read a paragraph on this point.
The budget adopted for 1951 by the third world health assembly in May of 1950 amounted to $7,300,000, to be financed by contributions from member states and from other groups, despite the fact that all the income that could reasonably be expected for 1951 would be substantially less than that which was required. The Canadian delegation pressed at this recent conference for a more realistic budget, but other delegations were anxious to maintain that figure of $7,300,000, so that was the figure that was agreed upon at the third world health assembly. Subsequently, however, the executive board decided to establish a ceiling on expenses of $6,150,000 for 1951. The Canadian representatives at all meetings of the world health organization have stressed the importance of implementing only those programs to which will attach definite returns, and have urged a greater degree of co-ordination with other specialized agencies and such economy as is consistent with efficiency. That has been our stand, and the amount requested for this year is $231,200, as our proportion of the $7,300,000.


Percy Ellis Wright: Have we any personnel who are working on this world health organization?


Lester Bowles Pearson: Yes, we have, Mr. Chairman. The director general of this organization is a Canadian, and is the former deputy minister of health and welfare.


[Stage Direction]
Item agreed to.
105. The Canadian government's contribution to the administration of the general agreement on tariffs and trade, $14,300.
Mr. Hatfield:: Can the minister advise what this item is for?


Lester Bowles Pearson: This, Mr. Chairman, represents our contribution to the administration of the general agreement on tariffs and trade. The budget is contributed by the contracting parties to that agreement, and those contracting parties include a great many countries. For 1951 the budget was set at $319,000, of which our share is $13,436 in United States dollars, or $14,242 in Canadian dollars. This

International joint commission-
107. To provide for preliminary studies and surveys of the mid-western watershed, $10,000.


Alistair McLeod Stewart: In common with other members, Mr. Chairman, I have not yet been able to read all the evidence the minister gave before the committee. It is possible that there are some questions which I wanted to ask which have been answered in that evidence, and if so I hope I shall be forgiven for repeating them. Can the minister tell me if there have been any further arrangements under vote 107 with a view to preventing future floods in the Red river valley?


Lester Bowles Pearson: Mr. Chairman, this amount, which seems to be a small amount in connection with this work, is our contribution to the original investigation. The work has been taken over now by the Department of Resources and Development. I should not like it to be thought that this amount was the only reflection of government activity in connection with this problem. This is really a matter for resources and development, and I think when the estimates of that department are up for consideration a good deal of information can be given. As a matter of fact, a good deal of information on this subject was given before the external affairs committee, and I can make the record available to the hon. member.


[Stage Direction]
Item agreed to.
109.	To provide for Canada's share of the expenses in connection with the St. John river reference, $50,000.
Heber Harold Hatfield: Will the minister explain what this vote is for?


Lester Bowles Pearson: This vote is to provide for
Canada's share of the expenses in connection with the Saint John river reference now before the international joint commission. When a new reference is made to the international joint commission it has been the practice, in the interests of convenience, for the Department of External Affairs to provide the expenditures arising out of the first year's investigation. Then the work would be taken over by the department of government more particularly concerned. This department's estimates for the current year include this item with regard to the Saint John river reference which was transmitted to the international joint commission last fall. Under the terms of this reference

the international joint commission has been requested inter alia to undertake an investigation to determine whether the waters of the Saint John river system could be more beneficially conserved and regulated. This estimate of $50,000 is based upon a preliminary review of the work known to be required and possible of accomplishment during the forthcoming fiscal year. We have kept in close touch with the government of New Brunswick in connection with this work.


William Joseph Browne: On whose
initiative was this investigation started?


Lester Bowles Pearson: I think the initiative for
this investigation came from the provincial government in New Brunswick.


William Joseph Browne: As to the
$40,000 for professional and special services, is that for engineering services, or does it cover other special services apart from that?


Lester Bowles Pearson: I am informed that it is
for engineering services.


Mr. Stuart (Charlotte):: I notice that there
is no item in connection with the Passama-quoddy tidal survey. Has the minister anything to report on that matter?


Lester Bowles Pearson: As I think the hon. gentleman himself knows, this Passamaquoddy reference has requested the commission to estimate the cost of a full-scale investigation which would be necessary to enable the commission in turn, should it be requested to do so at some future time, to make recommendations concerning the feasibility of the Passamaquoddy tidal power project. The international joint commission has reported that a further investigation would be necessary to make recommendations concerning the feasibility of that project, and that such an investigation-that is, the preliminary investigation into the feasibility itself-would cost about $3,900,000. It was suggested that the cost might be apportioned between the two countries in proportion to the benefits that each country would derive from the completed project. That report for this preliminary $3,900,000 investigation is now before the various departments of government for consideration, and is also being considered by the United States government. No decision has yet been reached.


[Stage Direction]
Item agreed to.
International joint commission-
110.	To provide for Canada's share of the expense of the Niagara Falls reference, $50,000.
Mr. Catherwood:: This is also a new
expenditure. Will the minister give us an explanation of this item?
Supply-External Affairs


Lester Bowles Pearson: The department's estimates,
as proposed for the current year, include this item with regard to the Niagara falls reference which was transmitted to the international joint commission last fall. It is anticipated that some other department will be responsible for the completion of this reference after the current year. We have put in $50,000 for the initial year, in order to provide for Canada's share of studies of remedial works to enhance the beauty of Niagara falls. It is estimated that the investigation would cost ps about $50,000 this year. The nature and extent of the items of expenditure for this purpose are: surveys, $20,000; modelling experiments, $25,000; travelling expenses and contingencies, $5,000. It is contemplated that the work in question will be planned by the commission and the international Niagara Falls engineering board and allocated between Canadian and United States agencies so far as may be possible in accordance with its location in the two countries.


[Stage Direction]
Item agreed to.
Terminable services-
111.	Commonwealth consultative committee on South and Southeast Asia (for technical assistance), $400,000.
Alistair McLeod Stewart: Can the
minister give the committee some information with regard to item 111?


Lester Bowles Pearson: As I think I have stated before, when this subject of economic assistance to southeast Asia was under consideration, a consultative committee has been set up and it is now in operation, with Australia, Canada, Ceylon, India, New Zealand, Pakistan and the United Kingdom participating in that work. This committee is concerned with the administrative and executive functions that flow out of our decision to give technical assistance to these countries-to check on the projects that they would like us to help them with, to exchange technical assistance and all that kind of thing. As to question of aid to southeast Asia beyond the purview of that committee, the Colombo plan will be up for consideration shortly when an item will appear in our supplementary estimates for that purpose.


Alistair McLeod Stewart: Have we sufficient technical assistance to offer to these countries in southeast Asia or is there still a shortage of it?


Lester Bowles Pearson: It has been an extremely difficult problem indeed to get adequate skilled technical help for these projects. As the committee will appreciate, that kind of help is in great
4166	HOUSE OF
Supply-External Affairs demand in our own country at the present time. This consultative committee and the agencies of our own government which are concerned with this matter are having real difficulty in securing the right of assistance; but we are hoping that we shall be able to make some progress in this matter.


Alistair McLeod Stewart: Will our technical assistance program be co-ordinated with the point four program of the United States and the program of the United Nations?


Lester Bowles Pearson: We think that the two can be co-ordinated and that they can work together. It would be a great mistake if the point four program of the United States and the Colombo plan program overlapped or got into each other's way. That is one of the things we are most preoccupied about, namely to make sure that they work together so far as possible.


Gordon Graydon: May I ask a question with regard to the point four program? It is referred to as the Truman point four program. I have always been a little bit confused in my own mind whether this point four program is really run by the United States government or by the United Nations, or really what the arrangement is in connection with it.


Lester Bowles Pearson: It is true that this United Nations program is sometimes referred to as the point four program and that the expression was taken from a statement of the President of the United States in a message to congress in which he dealt with this subject. It is a United States expression, if I may put it that way, which has been taken over by others. The point four program is much more than a United States enterprise. It is quite true that the United States is bearing or will bear the brunt of the financial burden in this matter. That is obvious. But it is also true the operation of the United Nations program will be controlled by the United Nations, or by a special committee of the United Nations which incidentally is under the direction of a former Canadian civil servant.


Gordon Graydon: What I was trying to find out was this. We are contributing to the Colombo plan under the commonwealth arrangements. But do we contribute anything to the point four program of the United Nations, or does the United States bear the entire financial cost of that program? That is something that has always confused me, and I wonder if the minister could clarify it-because I think it is rather important.


Lester Bowles Pearson: Well, I can understand the hon. member's confusion in the matter, because of the confusion connected with the indiscriminate use of the expression "point four". In Washington point four is considered as the United States program. Sometimes, as I have said, it is used to refer to the United Nations technical assistance program. We have nothing to do with the United States part of the program, but we do contribute to the United Nations technical assistance program. And that, in its turn, is quite separate from the Colombo plan.


Gordon Graydon: But I am still not clear in the matter. I know it is my fault-I am not suggesting it is the minister's:-but is the whole technical assistance program financed by the United States? If it is not, then do all nations in the United Nations bear a share of the cost in relation to the normal assessments of contributions now in existence?


Lester Bowles Pearson: Well, the situation I believe is that the United States does contribute to bilateral relief programs. United States programs are arranged with countries which it is anxious to help. But that is quite apart from the United Nations technical assistance program, to which the United States also makes a very substantial contribution indeed.


Gordon Graydon: In other words, they are two distinct things?


Lester Bowles Pearson: Yes, they are two distinct things.


Stanley Howard Knowles: I notice that last year we voted an amount equal to the amount we are now asked to vote. This will be seen by referring to page 160 of the estimates. It is also indicated that up to January 31, 1951, only $5,581 had been spent. It is indicated on that same page that it is not expected any further amount will be spent to the end of the fiscal year. In other words, out of the total amount of $400,000 the amount spent in that fiscal year was only $5,581.
Does the minister's statement about the difficulty of getting technical assistance account partly for the expenditure? Does the department hope to be able to do more along this line in the present fiscal year?


Lester Bowles Pearson: It is true that a very small proportion indeed of the original vote was spent. It is disappointing that it took so long to get this organization going. The reason for so little money being spent was that there was so much delay in establishing the organization, having its terms of reference agreed upon, and having projects agreed upon. But we have reason to believe that this year, now that the organization is a

going concern, we will not have nearly so much difficulty in spending the $400,000.


Stanley Howard Knowles: Is this amount of money a contribution we make to the consultative committee or does it include our own expenses? For example, we sent a delegation to Colombo early this year. Did the cost of that trip come out of this $5,581, or was it in some other vote?


Lester Bowles Pearson: No, this vote would not cover the expenses of any Canadian delegation to a meeting of that kind, nor did it cover any expenses in regard to our previous meetings at Colombo. It is purely for technical assistance in those countries.


Percy Ellis Wright: Is any of this money spent for the purpose of bringing students from those countries to Canada for technical training? If so, what numbers are expected to be brought here in the coming year?


Lester Bowles Pearson: We expect that a substantial proportion of this fund will be spent for bringing students to this country and giving them technical engineering training in Canada. During the last eighteen months forty-six trainees from four countries, chiefly from India and Pakistan, were placed in Canadian industries as a result of arrangements made with the countries concerned. We also encourage the establishment of students from those countries in Canadian universities for technical assistance, and some progress has been made in that regard. We are paying the expenses of the students when they are here, as well as their transportation to Canada and back.


John George Diefenbaker: Mr. Chairman, I think this would be the item under which a person could make a few observations concerning the Colombo plan, particularly in view of the fact that this vote covers technological and other assistance being given in southeast Asia.
i A number of members from the House of Commons, along with Senator Roebuck from the other place, in the months of November and December attended a parliamentary conference in Wellington, New Zealand, and Canberra, Australia, at which there were also representatives from the United States in the persons of two United States senators, namely Senator Ferguson from Michigan and Senator Green from Rhode Island. There were also representatives at this parliamentary conference from India and other parts of Asia. I am sure all hon. members of the House of Commons who were present at the conference will agree that the one message we were asked to bring back to our respective parliaments was the need for assistance to India of the kind contemplated under this item,
Supply-External Affairs and also generally under the Colombo pian, before communism achieves its intention of subjugating that land of India.
I believe one of the best booklets I have seen on the subject, indeed the only one issued as yet from the commonwealth parliamentary association meeting, is in the form of a report to the United States Senate, which I now hold in my hand. This was presented by Senator Green on March 22, to that legislative body. In this booklet is set forth something of what took place at that commonwealth parliamentary conference, and the ideas expressed there, unofficial though they were, from all parts of the commonwealth.
This morning the hon. member for Peel mentioned how helpful it would be if a conference of unofficial persons, representative of the various parts of the commonwealth arid the United States, could be convened. The minister offered his opinion regarding that suggestion. As a matter of fact there has been such a body in existence, although unofficially, since 1943, at which time, and for the first time, representatives of the United States congress, both from the Senate and the House of Representatives, met here in Ottawa. Since that time there have been a number of meetings.
At the conference in Australia there were representatives from the United States Senate in attendance. While there were disagreements in regard to courses which should be followed by several nations, without exception every Asiatic representative made an appeal to the representatives at the commonwealth parliamentary conference to stress the absolute need that something be done by way of assistance in southeast Asia. That was the view expressed by members of the legislative councils from Singapore, Malaya, India and Ceylon. Without exception they stressed the need of something being done immediately along that line. I should like to quote a few words from the report made to the United States Senate to which I have made reference, as follows:
India's basic requirements for improving the standard of living there must comprise the development of irrigation, schemes and rural electrification. Agricultural production must be increased; India needs more fertilizers as also agricultural machinery and building materials, and she must try to find them at a reasonable cost.
Then there is this significant statement:
The United States has an important stake in the Middle East. If 350,000,000 Indians should come under the domination of communism, the free world will virtually be split in half. Many think that as an integral phase of our global planning we must assist India to remain outside the communist orbit -must do this before it is too late and without strings attached.

,	Supply-External Affairs
That was the view, not only of the commonwealth representatives outside India and the United States representative who were there, it was stressed over and over again by the representatives from India. All of these had at one time or another fought against Britain. As they spoke I thought of the words spoken some years ago by the Secretary of State for External Affairs-I cannot quote them exactly-when speaking of the commonwealth. He referred to those members within the commonwealth who had achieved commonwealth membership by fighting against Britain while the great majority of the member nations concerned had achieved it by fighting with Britain. Without exception, those who had fought against Britain stressed a desire to see the British commonwealth preserved and maintained, without which freedom would never be assured anywhere in the world. In the maintenance of freedom they emphasized the need of support of the plan which was evolved at Colombo whereby millions of dollars in technological materials and other commodities would be provided.
As far as the Colombo plan is concerned, I doubt whether it has been sold to our own people. When I spoke about it on one occasion in this house I received three letters condemning me for supporting a proposition to give assistance to South America. That was the understanding of three correspondents with regard to what the Colombo plan actually comprised. Those letters came from three different parts of the country and there had been no collaboration, but they were all agreed that it was dangerous for Canadians to support a proposition that would bring any degree of assistance to South America.
I bring this matter again to the attention of the minister and re-emphasize the need. I realize that the government of India took a stand against the delivery to that country of low-grade wheat, either by way of state assistance or under the Colombo plan. Even if that assistance might not materially reduce the suffering that is now being endured there, nevertheless, even at this date and before the present year's crop is harvested, something should be done if it is only in the nature of a token gift of a number of hundreds of thousands of bushels of wheat. We would thus give to these people, not only renewed hope but an appreciation of Canadian assistance. Canada has a record of activities and actions, not only as a country as a whole but also its officials in the Department of External Affairs, and is held in very high regard in Asia. The recent gift of the United States

of several hundred thousand tons of wheat has had a tremendous effect on the thinking of the Indian people with regard to the United States, which is sometimes described in Asia as being an imperialist country. Canada is not in the position of being suspect, however unjustified suspicion in that regard may be in regard to the United States.
Whether or not several million bushels of wheat are available, I do feel that the delivery of a few hundred thousand bushels of wheat at this time-it is available in western Canada because the crop has been harvested and threshed this spring-would go a long way today to answer the contention of communism that the capitalist countries will do nothing to preserve Asia, and India in particular, against poverty and starvation.
Asia is in revolt against poverty. Today the Asiatic is being lured toward communism by the promise of material advancement which is held out as a means whereby he can secure support. It may be too late one, two or three years from now. The attitude of the Indian delegation was that they would give support to the United Nations, but when they were asked what contribution they would give in the way of manpower toward the setting up of an international police force to maintain peace or to give assistance in punishing aggression, the answer invariably was that that was something they were opposed to.
Their concept of the United Nations and the support they should give is one of moral assistance and high idealism. Today the government of India is endeavouring to meet the challenge of communism that has overrun southeast Asia to an extent of which we in this country have no appreciation. One weapon that will do more today than any weapon of war is the weapon of food. It is the greatest answer to communism among people whose inalienable destiny has been poverty.
I do not want to reiterate what has been said so often and so well by the hon. member for Peel. With all the force that I can bring to a discussion of this subject I appeal to the minister and to the government of Canada to do something. Do not wait until the fall. Do not ask these people to accept wheat that we would not turn into flour in our own country. Good wheat is available, not in the amount necessary to meet the situation there, but the effect of even a token delivery at this time would1 be far greater than the delivery of many million more bushels of wheat and other assistance six, eight or ten months from now. The booklet to which I have referred sets out the situation as the result of the

thinking of these United States senators on the subject consequent upon attending this conference, and they say:
We found simple, unrealistic, and almost childlike ignorance of the communist danger with nerve centres deadened to the meaning of communism . . . Everywhere in the Far East and in the Near East we saw evidences of shrewd, insidious communist propaganda. It was handled by natives who were won over and in Moscow educated to communism. It exploited every complaint, every hope, every fear, and every condition in each country in order to induce the people to hate America and the west, and to embrace communism.
Almost every one of the representatives at the conference to which I have made reference is a graduate of Oxford or Cambridge, men who have had every opportunity in the occidental world of education and who today are members of their respective parliaments, and their considered opinion was that nothing would better meet the onrush of communism into India than help of an economic nature. Particularly so far as the people of India are concerned, who for all time have been in one of two states, underfed or famished, the greatest answer and antidote to communism would be some assistance economically, even though only a modicum, in order to remove the threat of starvation. It is for that reason that I have said these few words on this occasion, to again enjoin the minister to secure some assistance from the government. The determination has been made to contribute $25 million this year. A part of that $25 million, if delivered in the form of foodstuffs, wheat and the like, will go further to meet the challenge that faces Asia today, as it does all parts of the world, than any other investment that I can think of.


John Horne Blackmore: I should like to associate myself with the comments of the horn, member for Lake Centre, and I should like to say a word in support of the general idea of developing the British commonwealth. Far too much attention is being given to the United Nations, the Atlantic pact, and pretty nearly any sort of international organization, compared with the interest shown in the British commonwealth. It seems to me that our generation is not being taught the tremendous value of the British commonwealth. Why that should be I do not know. I hope the minister and all members of his department are enthusiastic about the British commonwealth because enthusiasm is catching. Likewise lack of enthusiasm is also catching.
In Canada there is a tendency on the part of a good many people to think that when one speaks in favour of the British commonwealth one must be an imperialist. That attitude is utter nonsense and indicates
Supply-External Affairs ignorance and prejudice on the part of those who so speak. The British commonwealth is a great international organization. In 1914 the British commonwealth had more power in its little finger with which to preserve the peace of mankind than the United Nations will ever have, and it did not require contributions of money from all members in order to accomplish its end. I maintain if we can restore the British commonwealth to the relative degree of strength that it possessed in 1914 we shall by that action be doing mankind the greatest service it is possible for us to render in these terrible times in which we live.
The British commonwealth can be rebuilt. All that is necessary is that first of all we have an appreciation of what it means, and then that we work together to bring back the financial, industrial, trading and military strength which was the dread of all enemies of freedom for one hundred years up to 1914. If we could only restore the British commonwealth to where it was in 1914 how much more peacefully we could rest in our beds at night. How much more securely we could live. Without wishing to multiply words, may I urge that the minister do everything in his power to rebuild the British commonwealth, not in the sense that any portion thereof should ever lose any degree of its sovereignty. The British commonwealth never was strong because of the power of any central body to coerce members of the commonwealth. Its strength lay in the fact that members of the commonwealth contributed all their means and their blood gladly, cheerfully and happily, being inspired with the great ideal of gaining freedom and security for the world. That is the sort of thing we must have in the members of the commonwealth today. I urge the minister that he spare no effort to restore to the members of the British commonwealth their strength and courage, and faith in themselves.
I do not wish to labour overmuch this one matter that I propose to mention, I have referred to it several times. Most hon. members who were in the house in 1945 will remember the attitude I took on the subject in the fall of that year. I refer to the international monetary fund. In my opinion the international monetary fund is one of the gravest dangers in the world today. I suggest to the minister that he give the most careful study to the evil implications of that organization. I should like to draw to the minister's attention, without going into too much detail, the recommendation of the ECE report for 1950. I believe I will read the comment on this report appearing in the issue of May 29, 1951, of the Christian Science Monitor.

Supply-External Affairs


Joseph-Alfred Dion: Order. I believe the hon. member is out of order on this item, which is for the commonwealth consultative committee on south and southeast Asia. The discussion should be limited to this item.


John Horne Blackmore: Then I will talk about that when we go back to the first item, because this matter is of tremendous importance. I will close by saying I was going to refer to this international monetary fund and the Bretton Woods agreement as two of the greatest dangers to the British commonwealth today. If we are going to assist south and southeast Asia, as we should be able to, we shall have to abolish all such pernicious organizations as Bretton Woods. That is all I will say now; I will have more to say when we get back to the first item.


Stanley Howard Knowles: May I say just a word on aid to India, which was dealt with at some length by the hon. member for Lake Centre. The minister knows of our wholehearted support of the purposes for which this $400,000 is being voted. He also knows of our wholehearted support of the proposal for a supplementary estimate of $25 million for the Colombo plan. He also knows of our wholehearted1 support for the proposal that everything possible should be done this year to assist India in respect of her need for food. I noticed that the hon. member for Lake Centre supported the idea of feed wheat being sent to India this year as part of that $25 million. I would hope that it could be in addition to that amount, and I thought at one time I heard the minister say that was the intention. It seems to me that if possible we should avoid detracting from the purpose of that $25 million, which is to help India build up her own agricultural and productive resources. With that slight qualification of the remarks of the hon. member for Lake Centre I want to tell the minister again, though he knows it very well, how actively we support proposals of this kind.


[Stage Direction]
Item agreed to.
566. To authorize and provide for working capital advances in the current and subsequent fiscal years to maintain cash and bank balances at Department of External Affairs posts abroad, subject to regulations of the treasury board, the amount of advances hereby authorized outstanding at any time not to exceed $300,000.
Stanley Howard Knowles: Would the minister explain this item? I judge it is a new idea.


Lester Bowles Pearson: This item was explained to the committee on another occasion, though if necessary I have before me quite a lengthy explanation. I understand this is a new item made necessary by the requirements of our financing abroad. We require a certain amount of working capital to tide us over


the financial year when we have obligations to discharge which cannot be met because of new money not arriving in time. That is why we are asking $300,000 for this purpose. I would be glad to go into it in more detail if the committee so desired.


Stanley Howard Knowles: It is in the nature of an advance or loan?


Lester Bowles Pearson: Yes.


Stanley Howard Knowles: Actually it is repaid out of other votes of the department at some stage of the game?


Lester Bowles Pearson: That is correct.


[Stage Direction]
Item agreed to.
Joseph-Alfred Dion: Shall we now revert to item 84? It was agreed by the committee earlier that the discussion on general matters was concluded and that further discussion would relate only to the Ming Sung question, subject to the reservation made by the leader of the opposition.
84. Departmental administration, $2,272,597.


John Horne Blackmore: May I ask the minister to answer the questions I asked on the orders of the day? I think he was to answer them during his estimates.


Lester Bowles Pearson: That is quite true. The hon. member did ask a question on the orders of the day, and at that time he was informed that it could be dealt with when my estimates came up. In fairness to him I think I should attempt to answer that question now. The question which would have been raised by the hon. member, I think, concerned the advisability of bringing the federal republic of Germany into closer association with the community of free nations, and making peace with free Germany. I think that is what he had in mind this morning, and I might make a Short statement on that matter which is a question of some importance.
The announcement was made on October 26 last of the intention of the government to terminate the state of war with Germany as soon as we were in a position to do so in concert with our friends and allies. Since that announcement last autumn we have been in constant touch with the progress made both by the occupying powers and the German federal republic on this matter. Before we or the occupying powers could take further action it was necessary for the German federal republic to pass legislation eliminating from its laws all references to the state of war. That was done by the lower house, the Bundestag, on May 30, 1951, and by the upper house as recently as June 8. The promulgation of that German law is expected within a few days.

As soon as the new German law has been promulgated Canada, as well as other countries still technically at war with Germany, will be free to terminate that state of war; and in Canada this will take the form of a proclamation in the Canada Gazette.
I think I should recall here that the announcement of October 26, 1950, to which I have referred, makes it clear that such action will be quite different from any formal peace settlement with Germany. It will in no way affect Germany's obligations in respect of such matters as debts, claims and all that sort of thing. In order that the termination of the state of war may be related as closely as possible to similar action by the occupying powers, we are in consultation with London, Paris and Washington as to their intentions as soon as the Germans have taken their action. In any event it would appear that the necessary legislation will have been passed by the west German government before the end of June, so it is only a question of days, I should think, before Canada would be in a position to terminate the state of war with Germany.


John Horne Blackmore: Would it be logical to suppose that Canada would establish an embassy in Germany?


Lester Bowles Pearson: Yes. Once that technical change has been made the Canadian mission in Bonn will be raised to the status of an embassy, and the head of that mission will present his credentials as Canadian ambassador to the federal republic of Germany.


John Horne Blackmore: We have had a number of departmental regulations, rulings and all that kind of thing against Germany. These were drawn up during world war II, and probably they have been retained up to the present time. Have those been removed, or will they have to be removed?


Lester Bowles Pearson: Some have been; others could not be removed until the technical state of war was ended. Once that is done the way will be open for the removal of all those things.


John Horne Blackmore: I thank the minister for his answer. I appreciate the information.


George Alexander Drew: I just want to point out that when the chairman called this item he said it was agreed that the discussion would relate to the activities of the Ming Sung Company only.


Joseph-Alfred Dion: Subject to your reservation.


George Alexander Drew: I would remind the chairman that I pointed out that I wished to discuss certain subjects which would have some relation to this.
Supply-External Affairs


Joseph-Alfred Dion: I said it was subject to your reservation.


Lionel Chevrier: Mr. Chairman, I have been
given by the officers of the Department of External Affairs a list of the questions asked by certain hon. members in connection with the part taken by the Department of Transport in relation to the registration of the seven ships which were discussed on these estimates this afternoon. It is not my intention to put these questions on Hansard. I think perhaps the best way in which to deal with them is to reply to them generally as I go along. It may be that I shall not be able to give all the information that is required, but I shall certainly attempt to give all the information which is in my possession.
In the first place, I find that in March of 1950 the Ming Sung Industrial Company Limited applied for Canadian registry of seven ships. The company incorporated a Canadian subsidiary, and the subsidiary afterwards received from the Ming Sung Industrial Company a bill of sale.


John George Diefenbaker: What is the name of the Canadian subsidiary?	[DOT]


Lionel Chevrier: I am sorry I have not got
it. It is probably the same, with the words "Canada Limited" added. It might well be the Ming Sung Industrial Company of Canada Limited. I am not able to say.


Howard Charles Green: Where did the registration
take place?


Lionel Chevrier: I am coming to that. The
Canadian subsidiary received a bill of sale for the ships, and mortgaged the ships to the Ming Sung Industrial Company, that is the parent corporation. The mortgages were assigned to certain banks. I said that application was made in March of 1950, and in May, 1950, the bill of sale to which I referred originally, was registered, and the Canadian registry was affected at the city of Montreal.	*
Following the application of March, 1950, and later, an application was made for exemption under section 133A of the Canada Shipping Act. That is the section which requires masters, mates and engineers to be British subjects, and to hold proper certificates. Under that section the minister is empowered and has some discretion to grant exemptions to allow ships to carry officers, mates and engineers who are other than British subjects.


John George Diefenbaker: What section gives him
that power?


Lionel Chevrier: Section 133A of the Canada Shipping Act.
4172	HOUSE OF
Supply-External Affairs


Howard Charles Green: What year was that passed?


Lionel Chevrier: In 1948. I was saying that the minister has some discretion. When the matter was brought to my attention, I thought the circumstances were such that I should bring them to the attention of my colleagues. I did submit to them the circumstances as they were given, and by cabinet directive dated April 17, I was authorized to grant the exemption.


Douglas Scott Harkness: In 1950?


Lionel Chevrier: All of this is in 1950. I
was authorized to grant an exemption under section 133A, which I did grant on May 12, 1950.


John George Diefenbaker: When was that laid
before parliament?


Lionel Chevrier: If you will allow me to go
on I shall answer that question. The circumstances which were given were that these ships were likely to fall into communist hands [DOT] unless something was done to give them the protection of the Canadian flag. It was also stated that there were no British officers, - mates or engineers available, and that the only officers, mates and engineers available were those of Chinese nationality. Similarly, in Hong Kong there is a regulation which prohibits the operation of ships by other than British subjects holding the certificates of masters, mates or engineers. I understand that in Hong Kong also an exemption was granted from the British subject provision which they have over there to the seven ship$, thus allowing operation in the port of Hong Kong by Chinese nationals.
As the matter now stands-


John George Diefenbaker: Will the minister now
answer the question? When was that laid before parliament?


Lionel Chevrier: Subsection 2 of section
133A-it is not before me-


John George Diefenbaker: It reads:
The minister shall annually lay before parliament a special report stating the cases in which he has exercised' his power under this section, during the preceding year, and the grounds upon which he has acted in each case.


Lionel Chevrier: Yes, the section reads
somewhat to that effect. May I read it?
The minister shall annually lay before parliament a special report stating the cases in which he has exercised his power under this section during the preceding year, and the grounds upon which he has acted in each case.
Of course, the time has not yet expired during which the report may be laid before


parliament. If the section is read carefully. I understand that the time has not yet expired.


John George Diefenbaker: When would the
minister say that the time would lapse?


Lionel Chevrier: He would have until the
end of the year?


John George Diefenbaker: What year?


Lionel Chevrier: The year 1951.


Gordon Graydon: There is something strange
about that. I do not know what it is.


Lionel Chevrier: The hon. member had
better read the section.


Gordon Graydon: I have listened to it very
carefully.


Lionel Chevrier: You may read it, and put
your own interpretation upon it. Those are the circumstances as they concern the Department of Transport. I believe I have answered most of the questions which have been brought to my attention. Perhaps there is one other with which I have not dealt. Is it true that the captain is a Russian communist? There is no information in the department to that effect. As a matter of fact, the names which were given when the applications were made were all of Chinese origin. So far as I am concerned, at the time the application was made and the exemptions granted, all of the officers of the ships were of Chinese origin.
Another question is, was the exemption made under order in council? The exemption was granted not under order in council but by virtue of a cabinet directive.
The next question is, will the ships be seized and sold? I believe that has already been dealt with by my colleague the Minister of Defence Production, when he stated that there was no default under the mortgage. I take it that until there is a default under the mortgage, the powers vested in the mortgagee could not be exercised.


Agar Rodney Adamson: Can the minister say what
the gross tonnage of those ships is?


Lionel Chevrier: I can get it but I have not
that information before me. I have this information, that nine ships were built by the St. Lawrence Metal and Marine Works Incorporated, and the George T. Davie and Sons Limited. Two vessels were delivered at Shanghai in November, 1948, and seven vessels were delivered in Hong Kong also in November, 1948. There is no indication here of the tonnages of the ships.


Agar Rodney Adamson: They are comparatively
new ships?


Lionel Chevrier: Yes, they were all new
ships at the time.


Agar Rodney Adamson: Can the minister tell us
the speed or other details?


Lionel Chevrier: I am afraid I have not got
them available, but I can get the details.


Gordon Graydon: They are faster than the
tabling of the order in council, anyway.


Howard Charles Green: Will the minister read into Hansard the cabinet directive to which he referred a few moments ago?


Lionel Chevrier: I have not the cabinet directive with me; but I think perhaps I might table it on my estimates.


Howard Charles Green: I think it is important that we find out, during this debate, just what was contained in that cabinet directive. It seems to be a most unusual course to be followed, both by the minister arid the government. This section to which the minister referred was never intended to meet a case of this kind. Section 133A of the act reads as follows:
The minister may, if he thinks fit, and upon such conditions, if any, as he thinks proper to impose, exempt any ship-
It does not say anything about exempting seven ships.
-from any requirement contained in sections one hundred and thirteen, one hundred and fourteen, one hundred and thirty-two and one hundred and thirty-three, or dispense with the observance of any such requirement in the case of any ship,-
And I would point out these words:
-if he is satisfied that that requirement has been substantially complied with in the case of that ship, or that compliance with the requirement is unnecessary in the circumstances of the case, and that the action taken or provision made as respects the subject matter of the requirement in the case of the ship is as effective as actual compliance with the requirement.
The hon. member for Lake Centre will deal with clause 2 of this section but clause 1 is meant to cover only a case where it is not necessary to comply fully with the terms of these particular sections of the Canada Shipping Act. It was never intended to be used as a blanket measure to enable the citizens of another country to get the protection of the Canadian flag. In going that far the minister has stretched the section of the Canada Shipping Act far beyond any intention that was in the mind of parliament when this section was enacted.
He has said that these seven ships needed the protection of the Canadian flag and therefore this blanket exemption was granted.
Supply-External Affairs I would ask him to explain to the committee what right a company operated by Chinese citizens had to come to the Canadian government and get the protection of the Canadian flag? He has also made it clear that the banks had a mortgage or mortgages on these ships. Why was it necessary for the government to step in under those conditions? The situation is much worse than we were told it was earlier in the day. Apparently it was not a case of trying to protect the liability under the guarantee which had been given by the government. Here you have, in effect, a case of protecting the banks.
What is to be the position now? Two of these ships apparently are actually in communist territory. Are they still registered as Canadian ships? We understood from the Minister of Trade and Commerce last night that they no longer were in that category. I would ask the Minister of Transport to explain whether the two ships that are up the Yangtze river are still registered as Canadian ships. I would also ask him to explain what control, if any, the Canadian government now has over these ships.
The one exemption to which he has referred had to do with the officers or with certain members of the crew. What control has the Canadian government today over these ships? Furthermore, what steps would have to be taken to withdraw flag rights from these ships? Certainly it would appear to me to be a case where the flag rights should be withdrawn without further delay. I would ask the Minister of Transport to say what steps would have to be taken to bring that situation about.


Gordon Graydon: A red ensign and a red captain do not mix well together.


Lionel Chevrier: With respect to the two ships on the Yangtze river, my information is that they were never registered under the Canadian flag.


Howard Charles Green: The minister said there were seven ships under Canadian registry.


Clarence Decatur Howe: What minister said that?


Howard Charles Green: Is that right or not?


Lionel Chevrier: What I am saying to the hon. gentleman is this. My information may not be correct, but the information that is given to me is that the two ships on the Yangtze river were not registered under the Canadian flag. My hon. friend asks what control we have over the ships or whether or not we are in a position to do anything about the ships. As to granting of the exemption, I presume that could be withdrawn. What effect it would have, I am unable to say. I

Supply-External Affairs doubt it it would have any effect at all. I think my colleague the Minister of Trade and Commerce dealt fully with that matter yesterday.
As to the section not applying, the officers of my department felt that it did apply. I was of the opinion that it applied. I had some doubt as to whether or not the discretion should be exercised under the section. I consulted my colleagues, they authorized the exemption being granted under section 133A, and I granted the exemption on the date which I mentioned a moment ago.


John George Diefenbaker: As one department and another joins in this discussion, the problem becomes more perplexing. Now we have the minister saying that it was not an order in council. If it had been an order in council, there is under the act a requirement that it must be tabled in parliament. Section 133A reads:
The minister shall annually lay before parliament a special report stating the cases in which he has exercised his power under this section during the preceding year, and the grounds upon which he has acted in each case.
Certainly parliament did not find out anything about this matter by means of the minister complying with the statute. Parliament found out because the hon. member for Nanaimo discovered the situation.


Lionel Chevrier: May I interrupt the hon. member?


John George Diefenbaker: Yes.


Lionel Chevrier: The hon. member for
Nanaimo did not discover the situation, with all due respect to him, any more than did any of us. He received a circular letter which all of us received, outlining the circumstances.


John George Diefenbaker: I do not know who "all of us" were, because I do not know any other member on this side of the house who got a letter like that.


Lionel Chevrier: Hundreds were sent out.


John George Diefenbaker: They must have gone to hundreds of members on the government side of the house. The only one that was received on this side, to my knowledge, was by the hon. member for Nanaimo. Again may I point out that this section says that the minister shall annually lay before parliament a special report stating the cases in which this extraordinary power has been exercised. The order was made on April 17, 1950. Parliament was sitting at that time. Parliament sat again in the fall. Parliament has now been sitting steadily since February.


An hon. Member:: January.


John George Diefenbaker: Yes, January; and still this report has not been tabled. Sir, this is another example of a report that parliament had a right to expect to receive, under the law, in which ministers have failed to carry out their responsibility under the law.
I begin to wonder, having regard to two or three recent experiences in this connection, whether parliament is in fact receiving the information which ministers of the crown under the law are required to give. There can be no excuse for this report not having been laid before parliament. The year was up on April 17. Reports have been filed by the Minister of Transport for his department since that date. I am going to ask the minister-because, after all, this is the only way we will get information-in how many other cases under section 133A the minister in the last year has exercised this discretionary power.


Lionel Chevrier: I will answer. There have been a number of occasions when discretionary power was exercised under section 133A. Reports have been made from time to time under that section, and particularly since it has been amended following the war. These were war emergency powers; and sections 133A and 488A were sections which were enacted under war emergency powers, and were re-enacted in legislation following the war. There are a number of cases under which, although perhaps not on all fours with this case, exemption was granted following the war period. Reports were tabled in the house concerning those cases.


Clarence Decatur Howe: May I intervene to read a letter I think will throw considerable light upon the matter?


John George Diefenbaker: I was asking a question, and I wish to carry on until I get an answer. Because after all-


Clarence Decatur Howe: You don't really want the information.


John George Diefenbaker: You have no right to butt in. When the minister has information which will answer the question which I have asked the Minister of Transport, I will sit down. But we do not want any more of these ex parte statements because he told us this afternoon that he should not have been speaking last night.


George Alexander Drew: Now he thinks he should.


John George Diefenbaker: 1 am asking a simple question. Since this present session began in January have any reports been tabled regarding discretionary orders issued under 133A by the Department of Transport?


Lionel Chevrier: I would have to look it up. I am not sure whether they have or not.


Clarence Decatur Howe: If the court is closed, may I now proceed? This is a letter-


John George Diefenbaker: "If the court is closed"- who is there to stop us?


Clarence Decatur Howe: -written to Mr. T. R. G. Fletcher, Canadian government trade commissioner in Hong Kong by the manager of Ming Sung Industrial Company Limited.


George Randolph Pearkes: Is that the Canadian branch?


Clarence Decatur Howe: It is written to the Canadian government trade commissioner, the representative at Hong Kong.


George Randolph Pearkes: Was it from the Canadian branch of the company?


Clarence Decatur Howe: The Hong Kong branch of the company-"Ming Sung Industrial Company H.K.) Limited"-Hong Kong.


George Randolph Pearkes: A branch, not the head office?


Clarence Decatur Howe: That is right, it is a branch. It refers to this transaction. The letter is dated June 8, 1951. It came to my hand only a few moments ago. The letter states:
With reference to our conversation this morning regarding a letter from the China Coast Navigating and Engineer Officers Guild dated June 4, 1951, I wish to present a number of facts which may throw light upon the misleading statements made by the said letter.
Our vessels in trade: Hong Kong-Macao, passenger and cargo; Hong Kong-Macao-Canton, passenger and cargo; Hong Kong-Canton, passenger only; Hong Kong-Canton (nonscheduled service); oversea Chinese sent back to China from Malaya and Indonesia and sometimes cargo.
All cargoes shipped by our vessels are cleared by Hong Kong government in similar manner as cargoes shipped by other company's vessels. We do not enjoy special facility nor are we the only shipping company in Hong Kong-Canton trade. All our trades are legitimate.
Our officers and crew are all Chinese under the exemption from merchant shipping ordinance granted by the Hong Kong government. No Russian captain or officer, or crew on our ships.
Ships in China may be required to handle any kind of transportation, but that has nothing to do with our Canadian ships in Hong Kong.
To the contrary, regulations under the said exemption have been strictly complied with by our company.
As the main accusation made by the Guild's letter is the carriage of war materials, we beg that you would give us the honour of inspecting our manifests of cargoes carried wherever you please.
One point besides the contents of the Guild's letter is that the bulk of trade between Hong Kong and Canton is handled by the Kowloon Canton Railway, a government enterprise. We are not in a position to say that Hong Kong depends on normal trade with China, but we are definite that our Canadian ships in Hong Kong would not be able to earn their direct upkeep if normal trade is denied them.


George Alexander Drew: Well-
Supply-External Affairs


Clarence Decatur Howe: And it is signed, "C. C. Yang, manager".


George Alexander Drew: Will the minister indicate
whether that letter was forwarded to him, the one which he says just came to his attention a few moments ago, as the result of inquiries he had directed to the Canadian representative of the high commissioner?


Clarence Decatur Howe: No, it came through in a letter. I have made no inquiries. This was not my problem; but it was reported to me that this letter was in our files, and I have produced it.


George Alexander Drew: I would ask for the tabling of that letter and the covering letter-the original covering letter which accompanied it when it arrived in the minister's office.


Clarence Decatur Howe: I will be glad to do that.


Alphonse Fournier: Mr. Chairman, I do not believe we can have this item pass right now, because the opposition want more information. Some of the information may not be available immediately.
Therefore I will move that this item stand, so that later on, when the information is available, the three ministers concerned can answer-finance, transport and trade and commerce-and will be at the disposal of the committee. Therefore I move that the item stand.


George Alexander Drew: Before this is dealt with I would point out there are several details which should be brought forward as soon as possible so that this can be discussed with as much knowledge of the facts as we are able to obtain.
I would point out that today we have seen an excellent example of the effectiveness of committees dealing with estimates, in so far as they relate to the subjects brought before them. That was done, and the items were dealt with here expeditiously as a result of that procedure.
We are dealing now with something that has arisen outside of anything that was before the committee. And in order that we might proceed to deal with this in as effective a manner as possible it is essential that there be placed on record, not at some later date, but when we meet tonight-


Alphonse Fournier: The Minister of
Finance will not be here this evening. I have attended a meeting, and I am not going to start a discussion about having a committee for estimates. This is a question which is not discussed to the satisfaction, as yet, of the opposition; and we want to give them satisfaction. The minister has said that he has not all the information that was asked for. You do not want to insist upon proceeding, if we
4176	HOUSE OF
British Columbia Telephone Company admit at this stage we have not all the information? We are doing our best to get it as soon as possible.


George Alexander Drew: Mr. Chairman, may I point out it is possible for the government to produce, and to produce after the dinner recess, a copy of the minister's directive, or the cabinet's directive, which gave this special exemption to these ships.


Lionel Chevrier: May I interrupt the hon. gentleman in order to get that point clear right away. I indicated that there was no order in council, but I did discuss the matter with my colleagues and got a directive from them. Directives of the cabinet are not tabled, and it has been the policy repeatedly not to do that. I might as well clear up that question so that the hon. gentleman will not think it is possible to get a copy of the directive.


Alphonse Fournier: You will see right now how my motion seems to be in order.


George Alexander Drew: As it is after six o'clock the motion cannot be put. Six o'clock.


Clarence Decatur Howe: It does not require a motion.


Alphonse Fournier: I give notice now that I will move it at nine o'clock.
Progress reported.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.


Mr. H. W. Winkler (Lisgar) moved: that the tenth report of the standing committee on miscellaneous private bills, presented to the house on Thursday, June 14, be concurred in.


[Stage Direction]
Motion agreed to.


[Stage Direction]
The house in committee on Bill No. 116, respecting British Columbia Telephone Company

Mr. Applewhaite-Mr. Beaudoin in the chair.
On section 1-Rights of holders.
Howard Charles Green: Mr. Chairman, this bill has
several features, the main one being an increase in the authorized capital of the British Columbia Telephone Company from


$25 million to $75 million. As hon. members know, it has been considered by the standing committee of the house on railways, canals and telegraph lines. Before that committee a representative of the city of Vancouver opposed the passage of the bill on two grounds. In the first place it was contended that the increase sought, namely, $50 million, was excessive. In the second place the city of Vancouver has become convinced, as the result of experience before the board of transport commissioners on a recent application for an increase in telephone rates, that there are unfair contracts between this telephone company and its affiliates under which the telephone company is charged an unfair amount for certain services, and in turn passes on that excessive charge to the telephone users.
I propose to speak very briefly this evening on these two grounds of objection raised on behalf of the great city of Vancouver before the standing committee. The main objection to an excessive increase in capital is that the larger the increase the longer the time will be before the telephone company must return again to parliament. This company is incorporated under a charter passed by the dominion parliament. In that charter there is a provision which sets out that its works are for the benefit of Canada. The result of that provision is that the provincial public utilities board has no control whatever over the telephone company. It controls other utilities such as electric light companies, but it has no control whatever over this particular telephone company. The only public bodies which have any control at all are this parliament, when an increase in capital is sought or some other change in the charter, and the board of transport commissioners, which only has authority over the rates charged by the company and over the actual issuing of shares.
The city council have felt that the company has asked for too large an increase. They fear that an increase of $50 million will enable the telephone company to stay away from parliament for fourteen or fifteen years. They have no desire to hold up development or the installation of new telephones. They heartily approve of the development plans of the telephone company and it was admitted before the committee by Mr. Hamilton, the vice-president of the company, that if the amount of the increase were reduced the effect would not be to retard development at all but only that the company would have to come back to parliament at an earlier date than if the full $50 million were granted.

In the committee I moved that the total authorized capital should be $60 million instead of the $75 million which was being asked. That amendment of course was debated and it was voted down. The bill was treated as though it were a government bill. Liberal members-


Some hon. Members:: Oh, oh.


An hon. Member:: Shame.


Mr. Dickey:: It is not true.


An hon. Member:: That is right.


Howard Charles Green: Some hon. members may not
like it, but I repeat, and the fact is, that the bill was treated in the standing committee as if it were a government bill.


Mr. Campney:: Nonsense.


Mr. Robinson:: How did the opposition vote on that bill in committee?


Howard Charles Green: We hear the hon. member for Vancouver Centre say "Nonsense". That shows where he stands on this bill.


John Horace Dickey: It is not true.


Howard Charles Green: Did someone have something to say?


Donald MacInnis: Mr. Chairman, is it in order when one member makes a statement for another member to say that statement is not true? There is a very definite implication in that remark which cannot be hidden.
The Depuiy Chairman: It is not unparliamentary to say a statement is untrue if there is no imputation of intentional falsehood. See Beauchesne, third edition, citations 240 and 258.


Howard Charles Green: Well, just before this amendment was voted on, government members came trooping in from various parts of the house. Some of them had not attended at all previously. This bill was considered at several sittings, and some hon. members had not even bothered to come and learn what it was all about; yet for the vote on the amendment they trooped in and voted against it.
The Depuiy Chairman:	Order. The hon.
member has a good deal of latitude when speaking on section 1, but I do not think a discussion of incidents that happened in the committee that considered this bill has any relevancy to section 1 and what may be discussed there.


Howard Charles Green: The bill has been reported back by the committee, and I submit I am in order in discussing what took place during the discussion of this bill by the committee.
The Depuiy Chairman: The hon. member is quite right, as long as his remarks are relevant to the bill. I do not think the attitude
15. 1951
British Columbia Telephone Company of members of the committee, or the way they voted, or the way they attended committee meetings, has anything to do with the merits of the bill.


Howard Charles Green: Well, Mr. Chairman, I had finished that part of my remarks. I would only add that I was amazed at the attitude taken by the government members from greater Vancouver in view of the fact that the city council took such a strong stand against this bill on the ground that the increase was excessive.
The other ground of objection was the unfair nature of the contracts between the British Columbia Telephone Company and its affiliates. I can best illustrate that objection by pointing out that the British Columbia Telephone Company is owned by a Montreal company known as Anglo-Canadian Telephone Company, which in turn is owned by the Gary group. One of their companies is the Associated Telephone and Telegraph Company of Kansas City, but in any event the real control of the British Columbia Telephone Company is in the Gary group, the parent company being a Missouri corporation. The Anglo-Canadian Telephone Company in Montreal is purely an investment corporation. It has no staff to do any telephone work, but there is what is known as a licensing contract between that company and the British Columbia Telephone Company which provides that the British Columbia company must pay one per cent of its gross revenue to Anglo-Canadian in return for technical and financial advice. In 1948 the amount paid came to $181,051. At that time the rate was 1J per cent; it was dropped to 1 per cent just before the hearing of the rate application in 1950. Last year, when the British Columbia company had a gross operating revenue of over $16 million it had to pay Anglo-Canadian under this licensing contract more than $160,000 calculated at the rate of 1 per cent.
It is admitted that Anglo-Canadian has no facilities to supply any of these services, but it is argued that the Gary company could supply them. As a matter of fact the British Columbia Telephone Company has always been run efficiently and is perfectly able to supply all these services itself. The Gary company had no contract with the British Columbia Telephone Company,, and from Anglo-Canadian in 1948 received only $3,150 for the same services, whereas British Columbia Telephone Company had to pay Anglo-Canadian over $181,000. Incidentally there are other, smaller telephone companies in British Columbia which are brothers of the British Columbia Telephone Company,
4178	HOUSE OF
British Columbia Telephone Company being also owned by Anglo-Canadian, which were just as much entitled to these services as the main company.
The effect of a contract like that, of course, was that the telephone users of this company had to pay rates which would cover that $181,000 to Anglo-Canadian, whereas Anglo-Canadian paid only $3,150 to the parent company. That was a clear case of milking the telephone company, but in its decision on the rate application in 1950 the board of transport commissioners held they had no power whatever to consider the contract between Anglo-Canadian and the Gary group. I have here the finding of the deputy chief commissioner, Mr. Sylvestre, who had this to say on this point:
It is suggested that the payment of money by the company to Anglo-Canadian Telephone Company far exceeds the amount paid ini turn by that company to the affiliates who actually provide the service. This, in my opinion, goes far beyond the board's jurisdiction.
So the board held that they could not go into this question of the contract between the affiliates. The city of Vancouver is determined that further power shall be given the board so they may investigate such contracts and thereby do justice to the telephone users.
The committee did make a recommendation on that point in its report which was tabled yesterday. It said:
Consequent upon consideration of Bill No. 116 (Letter E of the Senate) intituled "An act respecting British Columbia Telephone Company" it is recommended that your committee be empowered to make a special report on the question of extending the jurisdiction of the board of transport commissioners to enable them-


William Alfred Robinson: I rise to a point of order. We are discussing section 1 of this bill, and I feel that the remarks of the hon. member are entirely irrelevant to the subject under discussion. I realize, sir, that you have quite a responsibility. Your kindness when we transgress the rules is well known, but at the moment I feel that in a discussion of this kind the rules should be strictly observed. I do not think this type of discussion is relevant to section 1 of this bill, and I must ask you to rule it out of order.


Howard Charles Green: On the point of order, Mr. Chairman, may I say that this is a report of the committee on the British Columbia Telephone Company bill. It reads:
Consequent upon consideration of Bill No. 116 (Letter E of the Senate), intituled: "An act respecting British Columbia Telephone Company" . . .
Now, that report was submitted with the report on the bill, and I submit I am in order in discussing this recommendation which was


made by the committee. If the hon. member will have patience, I am sure his pipe line bill will be reached a little later. The less he interrupts, the sooner it is apt to be reached.


The Deputy Chairman:: The governing rule in committee of the whole is standing order 58, section 2, which states that speeches must be strictly relevant to the item under consideration. In considering section 1 of a bill in committee, the practice has been to allow a discussion of a general character. In relating his remarks to this bill following this general practice, the member for Van-couver-Quadra is discussing some of the incidents which occurred in the study of the bill in the committee on railways, canals and telegraph lines. He was about to quote from the report of the standing committee which was tabled yesterday when the member for Simcoe East rose to a point of order. The committee report was tabled yesterday, and the hon. member may therefore quote from it.
As he had not yet quoted any of The recommendations contained therein, I cannot tell whether they are related to section 1 which is under consideration. Let us hear the quotation, and if it does relate to a discussion of this bill then the hon. member for Vancouver-Quadra is quite in order in quoting from that report.


Howard Charles Green: Mr. Chairman, this whole
question ran throughout the discussion of the British Columbia Telephone bill in the committee on railways, canals and telegraph lines. As a result of the discussion, we have this recommendation.


William Alfred Robinson: Read the report.


Howard Charles Green: The report reads:
Consequent upon consideration of Bill No. 116 (Letter E of the Senate), intituled: "An act respecting British Columbia Telephone Company," it is recommended that your committee be empowered to make a special report on the question of extending the jurisdiction of the board of transport commissioners to enable them, in approving or revising tolls and charges of a company under its jurisdiction, to investigate fully and take into account transactions relating to companies having an intercorporate relationship with such company, and to make recommendations in respect thereof.
In view of the fact that the whole question of rates and the jurisdiction of the board of transport commissioners is to be considered during the autumn session of this house, I hope that attention will be paid to this particular recommendation.


William Alfred Robinson: Having heard the report, I still submit it is out of order.


Howard Charles Green: I do hope that consideration will be given to this recommendation, and

that the government will see fit to give the committee power to bring in a recommendation along the lines requested in the committee report.


Donald MacInnis: Mr. Chairman, I wish to say a few words on section 1.


John Horace Dickey: Forty minutes.


Donald MacInnis: It is a great satisfaction to me that we have so generous a person in charge of the rules of the committee. I hope you will exercise the same generosity when other speakers are on their feet.


Louis-René Beaudoin: Order. The hon. member will address himself to the Chair.


Donald MacInnis: I intend to do that. As a matter of fact, I did address myself to the Chair, but there is a member across the way who insists on addressing himself to me. As you did not take steps to stop him, I had to do so.


Louis-René Beaudoin: The hon. member will realize that sometimes interjections are made in certain corners of the chamber which are not heard by the Chair. I noticed that the member for Vancouver East was looking across the way, and instead of the third person I heard him express himself in the second person. He referred to "you" instead of "he", and was apparently addressing himself to a member across the aisle. In any event I took it that he was not addressing himself to the Chair. If I had heard the interjection by another hon. member, I would certainly have reminded him that he cannot interrupt the member who has the floor without his consent.


Donald MacInnis: Thank you, Mr. Chairman. I shall try not to transgress again, even if the senior member for Halifax does interject.
The main factors in connection with this bill can be put before the committee clearly and briefly. The reason for members representing Vancouver constituencies opposing the granting of the full amount of capital requested by the British Columbia Telephone Company in this bill can also be put clearly and briefly. The company asked for an increase in capital from $25 million to $75 million. When we take into consideration that up to as late as 1947 the capital of the company was $11 million, I do not believe we were being unreasonable in suggesting that they should not be granted the full amount they asked for.
I remember that this company came before parliament in 1941 for an increase of $10 million in capital. At that time the situation was somewhat similar to the situation today. We were then engaged in a war and there were shortages. We are now preparing for
British Columbia Telephone Company what perhaps may be a war, or to prevent a war, and there are shortages. In 1941 the company asked for $10 million and ultimately got $1 million. On the basis of the amendment proposed by the member for Vancouver-Quadra in the standing committee, I think we were being very generous. The company operates on a federal charter which is based on the fact that the telephone company is a work for the general advantage of Canada. There is only one occasion when the people of British Columbia, through their public representatives, can have any influence at all on the activities of this company. That one occasion is when the company comes to this parliament for an increase in its capital. The operations of the company do not come under the public utilities commission in British Columbia nor indeed under the supervision of any authority. I drew that fact to the attention of the committee by quoting from a letter that was written to me by the acting secretary of the board of transport commissioners. I should like at this time to read the relevant paragraphs in that letter. I had referred to them a complaint that came to me from a municipality in British Columbia alleging discrimination in the allocation of residential telephones; and the reply I received was in part as follows:
I would point out, for your information, that the board has never considered that its powers with respect to telephone companies extend to the matter of furnishing or dealing with telephone service. Such powers as the board possesses are limited to matters affecting the tolls charged for the service.
Under the circumstances the board is unable to be of any assistance.
Yours truly,
C. W. Rump Acting Secretary
The city of Vancouver, a municipality representing the largest aggregation in British Columbia of telephone users of the British Columbia Telephone Company, realize the point I have made, namely that once the company was given the capital it was asking for, it need not concern itself with any authority whatsoever inside of British Columbia until the next time it had to come to this parliament ten years from now, or whatever number of years -it might be.
The city, therefore, through its corporation counsel, wrote to each member of parliament representing a Vancouver constituency and drew attention to the fact that the city was concerned in the matter and that a representative would be sent to Ottawa to appear before the committee on railways, canals and telegraph lines when the bill had been referred to it. In committee the hon. member for Vancouver-Quadra, as he has stated, moved that the capital, instead of being

British Columbia Telephone Company increased to $75 million, be increased to $60 million. The sponsor of the bill, the hon. member for Skeena, in opposing this amendment stated that when there was a difference of opinion as between the city of Vancouver, or for that matter, as between the British Columbia Telephone Company and any organized authority or any individual, as to the amount of capital required, he would always take the word of the British Columbia Telephone Company. That may be quite satisfactory to the hon. member for Skeena, if he wishes to look with such great favour on a corporation which is in business solely for the purpose of making profits for its shareholders. When that profit must be taken out of those who use its services in British Columbia, I think the British Columbia Telephone Company is well able to look after itself and does not need the protection of elected representatives; but those who are using its services do.
Let me now state the position of those who opposed the granting of the full amount of the increase in capital sought. In the committee an attempt was made to try to show that we would be holding up a measure affecting the ability of the company to extend its services by refusing anything less than what it asked for. I think the hon. member for Vancouver-Quadra and I are responsible residents of the city of Vancouver. We have lived there for a long time. I have represented the city, in one capacity or another, for more than a quarter of a century; and I certainly would not do anything that would hamper its progress or interfere with the welfare of the province I represent or of the city from which I come; and I would say the same thing for the hon. member for Vancouver-Quadra. We are sent here by our constituencies to represent and to protect the residents of our city from exploitation by corporations; and that is what we have attempted to do.
I am not going to go over the ground covered by the hon. member for Vancouver-Quadra when he drew attention to what happened when the vote was taken in the committee. In the early committee sittings we had to wait for a considerable time before we could get a quorum. But on the last day, when the vote was about to be taken, the committee room was filled1 with members of the committee eager and ready to finish its work according to the wish of the company. That kind of thing has happened before in this house, Mr. Chairman. I think it happened last year in connection with the pipe lines bills and it was drawn to the attention-
[Mr. Maclnnis.l


Louis-René Beaudoin: Order. I think the hon. member knows that what he is saying is not relevant to the clause before us when he speaks of the conduct of members in the standing committee.


Donald MacInnis: I think it is relevant to the proper conduct of the country's business in this house.


Louis-René Beaudoin: Yes; but that does not necessarily mean that it should be discussed under clause 1. If the hon. member wished to take exception to the conduct of some members of the standing committee, he could have done so when the motion was made for concurrence in the report of the committee, if such was the case, or on some other occasion.


Donald MacInnis: I will accept your ruling, Mr. Chairman; although I heard what happened during the last session discussed in the house. I did not make the strictures on the committee of that time; they were made in this chamber, though. I say that it is nothing short of scandalous that people who did not hear a word of the evidence should come into a committee and vote and determine what is to be done about a matter of which they know nothing. If that is the kind of protection the people of this country are going to have from their elected representatives, they are better off without it.


Mr. Thomas:: I find myself in a happy position on this bill, Mr. Chairman. None of my colleagues nor I are affected in any way by this bill. The only information that we have is that obtained from the evidence given in committee and from what was said on the motion for second reading of the bill. We have no personal quarrel with this company. We can therefore speak generally on this bill, with no prejudice. There is, however, a definite principle involved. The B.C. Telephone Company is a private company-


Mr. Byrne:: How do you like the provincial company?


Ray Thomas: -and as such, has our wholehearted support. The position of this group has been made clear on many occasions. We heartily agree with the principle of private ownership and private enterprise. This company does have a monopoly on this particular business in British Columbia; but that in itself is not sufficient. It does mean that it has responsibility far greater than any company operating under active competition. They have no reasonable competition to govern their actions whatsoever.
As a result their responsibility is much greater. Also the activities of this company

affect the welfare of tens of thousands of people in this country, and it is quite apparent it should be responsible to something.


James Allen (Jim) Byrne: What about the board of transport commissioners?


Ray Thomas: I will deal with that in a moment. It is quite apparent from the evidence given in the committee that the board of transport commissioners does not have sufficient authority to deal with this type of circumstance. It is also quite clear that parliament is the only body in Canada that has any control whatsoever over the British Columbia Telephone Company.
My colleagues in the committee and I opposed the bill, and supported the amendment which would cut down the capital asked for, not because we had any quarrel whatsoever with the company but because we did feel that, because the parliament of Canada was the only place in which there was any control over the activities of the company, it should be brought before parliament sooner than was indicated under the terms of the bill.
If that capital were cut down the company would have to come back within a reasonable length of time. We could look into its operations and see what it was doing. It operates as a utility, and as such it has a definite responsibility to the people generally as well as to the stockholders. If there were no deterrent whatsoever no one can say to what lengths they might go to make greater profits. As I said before, apparently the only body in Canada that has any control whatsoever over the company is parliament. The accounts of the company should be brought before this body at frequent intervals so that we may have some check upon its operations.


Mr. Hodgson:: Mr. Chairman, an amendment was moved in committee, that the capital be reduced from $75 million, but the amendment was refused. This company, with a capital of $11 million, came before parliament about four years ago and obtained an increase to $25 million. Now they are back with the request that it be raised to $75 million. I am of the opinion that a seven-fold increase, from $11 million to $75 million, in a period of four years, is something more than a drop in the bucket. I am an easterner but, while I do not belong to British Columbia, I am interested in that province. Indeed I am just as interested in the welfare of British Columbia as in that of any other part of Canada because we realize that if we are' to have a united country we must think of each other, and co-operate.
British Columbia Telephone Company
I was sorry in committee to see Liberal members rush in and vote in a solid bloc, just as though it were a government bill, as the hon. member for Vancouver-Quadra has said.


Louis-René Beaudoin: Order. As I have already indicated, we should not discuss the action of hon. members on that committee.


Clayton Wesley Hodgson: I abide by your ruling, Mr. Chairman. But the same thing happens here regularly; we do not have to go to a committee to see it. I would like to see this come to a vote, just to see how the hon. members from British Columbia will vote. Therefore I shall not take up more time.


Louis-René Beaudoin: I should point out
that clause 1 has been amended. The amendment, at the sixteenth line, is in these words:	[DOT]
but no change in the rights or privileges of any class of preference or preferred shares shall be made unless the holders of seventy-five per cent in par value of the shares of such class issued and outstanding agree to same.
That was the amendment adopted by the standing committee. Is the committee ready for the question?


Edmund Davie Fulton: For my own information may I ask whether it is necessary that that amendment be moved in committee of the whole or if it stands as part of the bill as reported from the standing committee on railways, canals and telegraph lines?


Louis-René Beaudoin: I must ask the
committee of the whole if section 1 as amended carries.


Some hon. Members:: Carried.
Section as amended agreed to.
Section 2 agreed to.
Bill reported.


Mr. Applewhaile moved: the third reading of the bill.


Mr. Speaker:: Is it the pleasure of the
house to adopt the motion?


Howard Charles Green: On division.
Motion agreed to on division, bill read the third time and passed.



BAPTIST UNION OF WESTERN CANADA

[Stage Direction]
The house in committee on Bill No. 336, to incorporate the Baptist Union of Western Canada-Mr. Diefenbaker-Mr. Beaudoin in the chair.
Sections 1 to 18 inclusive agreed to.
Louis-René Beaudoin: Hon. members will recall that this bill was considered carefully

Private Bills
in the committee on miscellaneous private bills and was reported to the house.
Bill reported, read the third time and passed.



UKRAINIAN CATHOLIC EPISCOPAL CORPORATION OF SASKATCHEWAN

[Stage Direction]
The house in committee on Bill No. 337, to incorporate the Ukrainian Catholic Episcopal Corporation of Saskatchewan-Mr. Knight -Mr. Beaudoin in the chair.
On section 1-Incorporation.
['The government has simply been evading the real facts in this case and trying to create the pretence that they cannot give information which would fully disclose what is the situation. This is an interesting sequel to the debate in 1949. It was a strange transaction then. This came before the house to ratify an irregular payment by the government. That payment was an obligation that had been incurred in excess of the original contract amount. That was disposed of at that time.\nAnyone who wishes to refer to the debate on that day will see that the government was very fully informed in regard to the Ming Sung Company and in regard to the nature of its activities and in regard to where it carried on business. The thing that should be remembered in this is that this is a company primarily operating in communist China. The interesting thing is that the government was prepared to accept a statement from that company delivered to them in Hong Kong as more reliable than a statement sent here by men who were working on these ships or working on ships out of Hong Kong and who, we have every reason to believe, were interested in the welfare of the shipping.\nThis situation is not merely an incident, it is a symptom of conditions. If this government were really taking a firm stand in regard to communism instead of its attitude in regard to trade with communist China,\nSupply-External Affairs this would not have happened, and we would not so easily have made this of definite advantage to a company now operating within communist China.\nItem stands.\nProgress reported.']
Louis-René Beaudoin: This bill was considered carefully in the miscellaneous private bills committee and has been reported without amendment.


Mr. Herridge:: Will the hon, member explain the purpQse of the bill?


Louis-René Beaudoin: It has been the practice for the sponsor to explain on the first reading. This bill has had second reading and the principle was accepted. It was then considered carefully by the committee on miscellaneous private bills and we are now in committee of the whole on the bill.


William Alfred Robinson: I should like to ask the sponsor if he knows any of the incorporators mentioned in section 1?


Mr. Knight:: I have been in touch by correspondence with the Most Reverend Andrew Roborecki who was installed as the titular and spiritual head of the Ukrainian Catholics in Saskatchewan at a ceremony on May 3 of this year. I have not met the reverend gentleman personally, but I have been in correspondence with him.


William Alfred Robinson: I notice there is only one incorporator named in section 1 and I was wondering if there will be others associated with the Most Reverend Andrew Roborecki?


Robert Ross (Roy) Knight: There is only the one incorporator at the moment, but this bill gives him authority to appoint associates who may work with him in looking after the temporal affairs of his diocese.


[Stage Direction]
Section agreed to.
On section 2-Head office.
['There is only the one incorporator at the moment, but this bill gives him authority to appoint associates who may work with him in looking after the temporal affairs of his diocese.']
William Alfred Robinson: I notice this section reads:
The head office of the corporation shall be at the city of Saskatoon, In the province of Saskatchewan, or at such other place as may be appointed by the corporation.
Do I understand by that that the corporation could set up its head office in Ontario or some other province of Canada?


Robert Ross (Roy) Knight: The answer to that question is "No." Two bills similar to this one have
[The Deputy Chairman.]
passed this house incorporating this particular organization, in one case in western Canada which would take in the districts west of Saskatoon, and in the other case in eastern Canada. Ontario would be within the eastern Canada bill.


William Alfred Robinson: That being the case, would my hon. friend be agreeable to an amendment providing that the head office of the corporation would be permanently situated in Saskatchewan and eliminating the last words of the section which reads:
-or at such other place as may be appointed by the corporation.


Robert Ross (Roy) Knight: I see no reason why I should support such an amendment which would be contrary to the petition presented by the titular head of this organization. These people were formerly known as Ruthenian Greek Catholics, and there are 70,000 of them in the province, and I see no reason why Saskatoon would not be a good place for their headquarters. That is the desire of these people and I see no reason why I should support an amendment to the contrary.


John Horace Dickey: As I understood it, the suggestion was not that the location be anywhere but as indicated in the bill. Would the hon. member have any objection to limiting the location of the headquarters to western Canada? When the hon. member was answering a previous question I understood him to say that another bill had been enacted incorporating this organization in eastern Canada.


Robert Ross (Roy) Knight: If my hon. friend will read section 2 of the bill he will have an answer to his question. That reads:
The head office of the corporation shall be at the city of Saskatoon, in the province of Saskatchewan, or at such other place as may be appointed by the corporation.
I would not be prepared to support any contrary amendment.


Louis-René Beaudoin: It being nine
o'clock, shall I report progress and ask leave to sit again?
Progress reported.


The Acting Speaker (Mr. Beaudoin):: It
being nine o'clock the house will resume the business which was interrupted at six o'clock.



[Stage Direction]
The house in committee of supply, Mr. Beaudoin in the chair.
A-Department and missions abroad-
84. Departmental administration, $2,272,597.
Alphonse Fournier: When Mr. Chairman called it six o'clock I noticed that there was

disagreement between certain hon. members as to the procedure to be followed in discussing this item of external affairs. During the dinner recess I did look up the authorities to see if I had been a little hasty in the motion that I proposed to move. I am always open to conviction, and I must say that perhaps I was not quite in order. I admit that very candidly. If I understand correctly the discussion that took place concerning this Ming Sung Company, what the opposition is trying to find out is if these bottoms are carrying military equipment or supplies.


Gordon Graydon: Or Russian captains.


Alphonse Fournier: Or Russian captains.


Gordon Graydon: And communist crews.


Alphonse Fournier: Or any other suggestion the hon. member may make.


Gordon Graydon: We want to smoke out the communists.


Alphonse Fournier: The Secretary of State for External Affairs has said that he has not full information on the questions that were put to him.


Clayton Wesley Hodgson: He should have.


Alphonse Fournier: That is your opinion. At all events, he has not the information at the present time. If we could let this item stand he, his officials and the other ministers interested in this question would get the information, which I do not think they can secure this evening. We could let the item stand and revert to some other item with the undertaking that the Minister of Finance, who has some responsibility in this matter, could handle the item later when we get the information. I thought I could stand up . and move that the item stand.


John George Diefenbaker: But you cannot.


Alphonse Fournier: I know I am not as
learned as my learned friend.


John George Diefenbaker: No, and I realize that!


Mr. Gibson:: He does not pretend to be.


Alphonse Fournier: I do not pretend to be, but I never laugh at people who admit that they do not know something.


John George Diefenbaker: I am not laughing.


Alphonse Fournier: The only motion
allowed under citation 480-and you have no doubt read it during the dinner recess-when a resolution is under consideration in committee of supply, is that the amount be reduced or that the chairman leave the chair either without making a report or to report progress on certain resolutions. After stating that we have not the information ready this evening, if the government wanted to insist
Supply-External Affairs that we do not continue this debate I could certainly move that the committee rise, report progress and ask leave to sit again this day. That would be in order. However, I do not think when we are on the home stretch, and being such good friends with the leader of the opposition, that I should deny the opposition the right to make speeches if that is what they wish, because you cannot get an answer. We have told you we have not got the information. I will not move that motion because we will make no progress, and because, having a certain responsibility leading the house, I think it would be a loss of time. I think we should all agree to let the item stand and take up another department. I suggest that is the proper way to deal with it.


George Alexander Drew: If it were the fact that the essential information was not available I would be the first to concur in the suggestion. In fact I indicated earlier that I thought that if the information was not available the item might at that time stand until it could be obtained. I would point out to the minister, however, that as a result of the further discussion which took place it is now clear that most of the essential information is available. There is one subject on which the government possibly has not yet been able to satisfy itself, and that is as to the present personnel manning the ships. It may be that they have not been able to find out whether in fact a Russian captain is in charge of one of the ships. It is obvious from the letter that was read into the record just before the dinner recess that an inquiry had been directed to that subject and that a reply had been received.
While that is important, and while it would be extremely useful to know if in fact these ships, manned by other than Canadian seamen, are under the direction of Russian captains or officers, nevertheless I suggest that the information that could readily be placed before the house would make it possible for us to settle some of the principles which are now involved in this discussion. It seems to me that the only two things concerning which the government suggests it still requires information are as to the identity of the crews and whether or not the ships are carrying materials of war. There are, however, other things that could be placed before the house which would explain this transaction. There certainly must be files readily available dealing with this particular subject. The matter was placed before the cabinet, as has been explained by the Minister of Transport.
The very fact that it was placed before the cabinet brought to the attention of the
4184	HOUSE OF
Supply-External Affairs Secretary of State for External Affairs the international aspect of this problem. The financial aspects are secondary to the very important principles involved in a change of registry of this kind and the transfer to Canadian registry, with the use of the Canadian flag, of ships operating in association with a company whose main business is now in communist China. It has been explained to us that this was not done by order in council but was done after consultation with the government by government directive. That directive can be placed before the committee. I hope it will not be suggested that, with this discussion having taken place yesterday and today, the government is not in a position to place that directive before the committee. It would indicate exactly what the instructions were.
It also should be possible to obtain information as to the terms of the directive and as to the circumstances under which it was made. The application which prompted a decision of that kind will be on file and would explain the grounds upon which the government made this very unusual decision. Then we also should be informed now as to how it was that the government agreed to the transfer to Canadian registry of ships which had originally been delivered to a company operating mainly in communist China, and why the government concurred in the setting up of a Canadian subsidiary of that Chinese company with head office in Montreal at a time when this company, with branches throughout China, was operating within the communist area.
I should think that would be clearly disclosed by the material which must have been on file at the time this matter was considered and the decision reached by the government. The files would also disclose, and it would be possible for the government to ' produce, the communications which informed this Canadian subsidiary of the Chinese company as to what the conditions and terms were under which they would operate these ships with Canadian flags and under Canadian registry.
Then we come to a later stage. The Minister of Trade and Commerce has already disclosed that this subject has been under consideration for a sufficient length of time to receive a communication from the Canadian representatives in Hong Kong. The letter he read into the record indicated that an inquiry had been directed to the Hong Kong representative of the Ming Sung Company and a reply had been received from that company denying that a Russian officer was in charge of one of the ships, and making certain statements as to the nature of the


freight carried. The very fact that the government directed such an inquiry and that it has already received a reply indicates that there must be some other material that can be disclosed to the house which prompted the inquiry. Doubtless there is other information. The Minister of Trade and Commerce undertook to table the letter from which he read and the covering letter from the Canadian office in Hong Kong, and I trust that those documents have been tabled already for the information of this house.
This would give us a fairly complete picture. It would make it possible for us to see exactly what has happened in this case. It is not possible for us to understand what took place unless that information is fully disclosed. Before dinner the Minister of Transport made a comment to the effect that there was an established practice that government directives of this nature are not produced. I would hope that upon further consideration neither the Minister of Transport nor the Secretary of State for External Affairs would take such a position, because this transaction is of such a nature that the members of this house should have full information. There can be no question of security involved, or anything of that kind, which would present any reason why this house should not be fully informed as to the directive which interpreted this very remarkable decision, which resulted in the transfer of these ships to Canadian registry.
I have outlined these things that could be given the house. This must be information which is readily available now. If the minister who is leading the house, and who has stated the position of the government, will examine the suggestions I have made he will not find one that could not be complied with. Then we would be in a position to discuss this subject which is definitely related in a very important way to the policies of the government in relation to communist China and other communist countries at this time. It is known that the Secretary of State for External Affairs intends to leave Canada within the next few days. This matter involves a very important question of policy. The information I have mentioned can be produced and this whole question of policy can be considered while the minister is still here.
Of course there is one way in which this debate could be disposed of: that would be for the Secretary of State for External Affairs to adopt the suggestion which was made in all earnestness, that the government announce now that it will cancel this transfer and bring these ships back fully under Canadian control. I repeat that suggestion and urge upon

the Minister of Public Works its adoption as a means not only of facilitating the business of the house but of settling something which otherwise is going to cause the people of Canada very great concern.


Alphonse Fournier: I do not want to cut off this interesting debate. The suggestion of the leader of the opposition is that the Secretary of State for External Affairs give assurance that we will take Canadian registry away from those ships. The answer given today by the minister was that he would not give that undertaking before he had completed the inquiry which is being made into this matter. He said that when all the facts were known the government would announce its policy. Then he went on to say that the inquiry was going on, and he did not have the full information. So I do not think it would be fair to ask the minister to give that undertaking, without even consulting his colleagues in the government. If hon. members wish to continue this debate I shall not intervene again after I sit down. The Secretary of State for External Affairs gave all the information in his possession, and said he was trying to get the information to answer the other questions asked. He has not received that information, and he says he will need time to get it. If hon. members wish to continue to speak on this subject I will not object, because I do not want to be told I am trying to railroad the house into something, as has been said before. On the other hand, the Minister of Finance did not know this matter would develop during this discussion, and he is not in the house. He is one of those interested in the matter. I am ready to listen to what hon. members have to say-


George Alexander Drew: Before this discussion leaves the very amiable atmosphere in which it has been conducted so far-


Alphonse Fournier: It will continue in that way.


George Alexander Drew: -I would point out to the minister who is leading the house that the information to which I have referred must be available.


Alphonse Fournier: You must take the minister's word.


George Alexander Drew: I am satisfied that the filing system is sufficiently efficient that within five minutes it would be possible for the Secretary of State for External Affairs to obtain from the appropriate department not only the government directive in regard to the transfer but also the information that was before the government at the time it made its decision. I am sure the minister would not question that. It is also certain that the government can produce from its records-and after all 80709-266J
Supply-External Affairs it is the government speaking, not an individual minister-the file containing all the information in regard to the inquiries which were directed to the Canadian office in Hong Kong, as a result of which the officials of that office got in touch with the Ming Sung Company in regard to certain details. Obviously these questions were related to information which had been placed before the government. That information is on file and can be produced in this house tonight, not a few hours from now, or a few days from now. It can be produced within less than five minutes if instructions are given the appropriate department to produce those files. That is what I am suggesting should be produced now for the information of this house.


Alphonse Fournier: The leader of the opposition has followed this debate quite closely, and he knows this incident began with the receipt of a letter by the hon. member for Nanaimo. The Secretary of State for External Affairs mentioned that he or someone in the government had also received a copy of that letter; and on that letter I understand external affairs is calling for an inquiry into the facts, but it has not received the information yet. As I understand it, that was the beginning. The hon. gentleman says it must have been based on something. If I correctly understand what the Secretary of State for External Affairs said, it was based on the information contained in the letter from the president of the guild to the hon. member for Nanaimo. That was the genesis of the whole matter. We admit we have not had time since receiving that letter to complete the inquiry and have all the information requested by the opposition. Believe it or not, that is the position this evening.


George Alexander Drew: Does the Minister of Public Works suggest that the letter which was read into the record this afternoon by the Minister of Trade and Commerce was received as a result of inquiries which were only related to the copy of this letter to which he now refers? This is June 15, and I think it would appear fairly obvious that if an inquiry of this nature has already been conducted, a reply has been received from Hong Kong. If the people in charge had made inquiries from the Ming Sung Company, there must have been some other information before the government. Whether there was other information or this information, at least it is apparent the government made some inquiry, and has received not only the letter from the Ming Sung Company to the Canadian office in Hong Kong but it has also received the letter-which I would remind

Supply-External Affairs the Minister of Public Works the Minister of Trade and Commerce has undertaken to table and I hope has tabled-which was sent and which forwarded the other letter that has been read.
Now these letters are available, and they will give us some information. When the minister speaks of where this started, we are talking about the change of registry and that started by some request to the government of Canada from the Ming Sung Company, a Chinese company operating at that time mainly within the communist area of China. It was a request that ships which were then under Chinese registry be transferred to Canadian registry, and that special exemption be provided so that the ordinary regulations would not apply and those ships could be manned by crews other than Canadian crews. We want to know about that. We want to know what information the government has had in the intervening period, and what direction the government gave as to how that operation had to be carried on; what information the government has already obtained-and it has obtained some information from Hong Kong as a result of its inquiries because the Minister of Trade and Commerce has produced a letter which was written from the company, not to the government here but to our officers in Hong Kong. We can proceed with that information before us and perhaps clear the matter to some extent, even if we are not able to decide whether the captains are Chinese or Russians or what the actual trade is that is being carried on by those ships.
Before I sit down I would suggest that there is one reason why this should be discussed now with the information we have. It should not be necessary to repeat that nothing should be allowed to continue which may be inconsistent with the efforts we are making along with the other free nations in Korea. There is one rather unusual aspect of this whole situation. The ships, which apparently are among the most important ships operating out of Hong Kong, are operating on a triangular route. They are operating from Hong Kong to Macao in a Portuguese possession. While the freight may be under British certificate when it leaves Hong Kong, that offers no assurance as to what happens, quite within the laws of Macao, at the time the ships go there. The whole shipload may be unloaded at Macao and a completely new shipload of materials essential for war taken aboard, and then transferred to some Chinese port. We know that the ships are moving to communist controlled ports. With the information the government now has, I should think we could reach a decision


without much difficulty as to whether or not this should be allowed to continue, even though some of the information is not yet available.


John George Diefenbaker: Mr. Chairman, the
Minister of Public Works mentioned the genesis of this affair, if I heard him aright, and the genesis of it would be the circumstances under which the cabinet directive was made in April, 1950. The exemption of this company from coming within the provisions of the Canada Shipping Act was an act of the Minister of Transport. He is in the house now, and must have in his files all the information that we have requested. Section 133A to which he referred this afternoon provides that the minister may, if he thinks fit, exempt any ship from any requirement referred to therein, if he is satisfied that the requirement has been substantially complied with, and so on.
The minister received a directive from the cabinet. I would have thought that what he did under this act would usually be done under an order in council or regulation. In this case it was not so done. If it had been done by regulation or order in council, that regulation or order in council would have been, under the law, placed before parliament. However, he says he proceeded upon the basis of a directive from the cabinet. He could only proceed on that basis if he was satisfied that the request of this company was a proper one. The information asked for by us must be in the files of the Minister of Transport, upon whose shoulders the responsibility for granting the exemption rests. Who made the application for change of registry? If I understood the Minister of Transport aright, his explanation is not the same in that regard as that of the Minister of Trade and Commerce last evening. What were the circumstances upon which the minister exercised an almost judicial discretion in determining that this company should be exempt from the provisions of the Canada Shipping Act? What was the evidence before him that caused him to make a decision so at variance with what one would expect, allowing aliens, none of whom acknowledge the Canadian flag or anything it stands for, the use of the Canadian flag in China seas.
To whom was money owing in respect of the building of these ships? How did the banks find themselves in a position where some $12 million was owing to them? What were the circumstances in connection with the financing of these ships? How much money did the Minister of Trade and Commerce advance the builders of these ships through the Canadian Commercial Corporation. Those are questions upon which we have a right to

have information. This information must be in the possession of the Minister of Transport for certainly no Minister of Transport would grant an exemption under section 133A on any of the evidence that has so far been placed before parliament today, either by him or by the Secretary of State for External Affairs.
This afternoon production of the directive was asked for. The directive must set forth the circumstances explaining why this was done. What is the explanation available to the government in regard to the extraordinary proposition of placing these ships, certainly if not under the control at least under the active surveillance of communists in China? Certainly no one could seriously argue that such extraordinary action would be taken on the kind of evidence that the members of the government have placed before this committee during the past twenty-four hours.
Now then, there is a second phase of it, once we find out the genesis of the circumstances. It might be of interest to know who are the Canadian directors of this subsidiary. Did the banks make any advances to these directors after the exemption order was granted by the Minister of Transport? Did the parent company, the Chinese company, owe the banks? These are questions to which parliament has a right to have answers. These are questions, the information regarding which must be in the possession of the Minister of Transport or he could not .have exercised his discretion in granting the order under section 133A. They must have been put before cabinet. The minister went to the cabinet for advice. What information did he provide the cabinet with? Why was this done? What is the advantage to Canada to have the ships operating under these circumstances? What Canadian wants to see the Canadian flag carried around in the China sea by those who certainly acknowledge nothing of what the flag stands for?


Mr. Blue:: Will the hon. member permit a question?


John George Diefenbaker: Certainly.


Donald Buchanan Blue: Is the hon. member trying to win an argument or solve a problem?


John George Diefenbaker: I am not trying to convince my hon. friend, because I realize that is impossible. I am trying to point out, however,-


John Horace Dickey: Answer the question.


Gordon Graydon: They did not put the ships up for auction.
The Depuiy Chairman: Order.
Supply-External Affairs


John George Diefenbaker: Mr. Chairman, that
information the government has now.


Donald Buchanan Blue: Answer the question.


Clayton Wesley Hodgson: What respect have you for the Canadian flag? Answer that question.


Donald Buchanan Blue: Just as much as you ever had.
The Depuiy Chairman: Order. I would ask hon. members not to interrupt the hon. member who has the floor.


Donald Buchanan Blue: Answer the question.
The Depuiy Chairman: Order. Hon. members will realize, of course, that when a question is asked of an hon. member who has the floor, he does not have to answer it.


Donald Buchanan Blue: There is no answer.


John George Diefenbaker: Particularly when the question is unintelligent and unintelligible.


Donald Buchanan Blue: My colour is as bright as yours, Mr. Green.


John George Diefenbaker: That was lost on the desert air because it was not heard.


George Alexander Drew: It has gone into the blue.
The Depuiy Chairman: Order.


John George Diefenbaker: Apparently that is what this government is trying to do. We want to know those facts.
Then we come to the second stage-and the Minister of Public Works says that we have not got all the answers on that yet- namely the question as to what the situation is now, What is happening in the China sea between Hong Kong and the China ports. Information has been asked of the Secretary of State for External Affairs. When the minister says in effect "I have not that information", I would be the first to agree that he has not the information as yet. But let us get first things first. Let us clear up the genesis, to use the expression of the Minister of Public Works.


Gordon Graydon: Before the exodus- came.


John George Diefenbaker: Let us clear up the unusual circumstances that are apparent. Why did the minister grant the exemption order? He came in this afternoon fully prepared to answer. He gave us a short answer. But many of the questions that we asked have not been answered.


Lionel Chevrier: Mr. Chairman, the answer which I gave to the committee this afternoon is all of the information that I had at my disposal. If the hon. member for Lake Centre is perplexed, I am afraid he is attempting to make a great deal of political capital out of this matter which is not at all as e ctraordinary as he or those associated with him would lead us to believe.

Supply-External Affairs
When I came to the house this afternoon at five o'clock or five-thirty, I asked what the questions were that I was required to answer. The leader of the opposition kindly said, in order not to have those questions repeated, that perhaps I could get them from someone else and obtain the reply. I should like the committee to be reminded of the fact that this is an application which was made in March of 1950. I do not pretend to have a better memory than any other member of parliament, and I certainly cannot be expected to carry in my head or in my mind all of the details concerning this application made more than a year ago. Armed with the questions which were given to me, I obtained the information which was available at the time; and by the time I gave it, it was five minutes to six. It was therefore impossible for me or for any other officers of the department to obtain all the information that was required by the leader of the opposition and by the hon. member for Lake Centre. As a matter of fact, a great deal if not the greater part of the information asked for by the hon. gentleman is not obtainable from my department or from my files. But since both the leader of the opposition and the hon. member for Lake Centre have repeated the speeches they made earlier, and added to them, let me repeat what I said at the time and what the position is.
In March of 1950 an application was made for Canadian registry of some seven ships, if my memory serves me aright. The application was made by the Ming Sung Corporation Limited, a foreign company; and out of that it followed that they formed a Canadian subsidiary. It was stated by the leader of the opposition that the government concurred in the formation of the Canadian subsidiary. I am not in a position to say whether it was a provincial corporation or a federal corporation. If it was a provincial corporation, surely the federal government did not concur in its formation. If it was a federal corporation, then it was incorporated in the usual manner through the office of the Secretary of State, and the government had nothing to do with concurrence in that. What the Department of Transport did-and I take the full responsibility for it-was to grant Canadian registry. There was nothing else that could be done because any other company doing the same thing that this company did-that is, form a Canadian subsidiary and get a bill of sale-had every right to go to Vancouver, to Toronto, to Montreal or to Halifax, register that bill of sale and there be entitled to place under Canadian registry the ships in question. There is nothing abnormal in that procedure.


The next thing that happened was the application under section 133A for an exemption from the carrying of British subjects as officers, mates or engineers, not of crews. The leader of the opposition said: You have all of the information required; surely you can tell us what the present personnel is, what the identity of the crew is. I have no way of finding out what is the present personnel of those ships. Neither have I any way of knowing what the identity of the crew is. But what I said this afternoon is that when the application was made for a certificate of exemption under section 133A of the Canada Shipping Act, the names of the officers, mates and engineers of those ships were furnished to us. They were all of Chinese origin, all Chinese nationalists. What happened since then I cannot say. It may be that the Secretary of State for External Affairs can obtain that information. I do not know whether he can or not. But certainly I have no way of obtaining it.
Let me go a step further. The hon. member says that under section 133A this certificate of exemption was granted, something which was a matter of grave responsibility. I consider that those matters coming under section 133A are always serious matters. When I have granted an exemption, as I have done oftentimes but not repeatedly, I have exercised the discretion myself. But on this occasion I felt that I should not do that. On this occasion I felt the circumstances warranted that the matter be revealed to my colleagues in the cabinet. And that I did. And I was given instructions to grant the exemption under 133A, which I did in the month of May or April, of 1950.
Now then, the leader of the opposition says, "Produce the directive." I will have to inquire whether or not a written directive was given. I have no recollection of whether it was or not. I do know this, that repeatedly matters are discussed in cabinet and advice is sought from them-"Here is a matter in which I require advice." A discussion follows and advice is given.
There was no order in council, so far as I could ascertain in the few minutes that were at my disposal this afternoon-about twenty-five minutes. There was no order in council given. There was approval given. And so far as I can recollect-and I might be mistaken; I might have to take it back-but so far as I can recollect there was no written directive. Approval was sought and approval was granted.
That being so, there was an oral directive that exemption be granted. And acting under

that advice, and with the concurrence of my colleagues in the cabinet, I issued the exemption under 133A.
I now come to the main objections that are being raised, both by the leader of the opposition and by the hon. member for Lake Centre, who asked countless questions dealing with other phases of the matter. The financial aspects of this I have had nothing to do with. If I were familiar with them in detail I would give them to the house.
Then it was asked: Who made the application. When was the application made? What were the advantages? I repeat that I have no information of that kind available. But I did put, in the few minutes at my disposal before six o'clock, all the information that I had at my disposal and that I was able to get; and I will say this, that if the House of Commons wishes to have it I can obtain all the information that it is possible for me to get in the department.
Beyond that I cannot go. I have nothing to hide, in so far as the two matters with which I have been concerned in this application, are concerned.


Howard Charles Green: Whether the directive from the cabinet was in writing or oral, the exemption issued by the Minister of Transport certainly must have been in writing. We are entitled at least to have that document brought before the House of Commons. Obviously it was very far from the usual form of exemption. In discussing it last night the Minister of Trade and Commerce had this to say-


Lionel Chevrier: May I interrupt the hon. member, without any desire at all to turn him from his trend of thought. He says that this exemption was one which was out of the ordinary, or at least one that was not usually granted, and that therefore there must be some record. I said in my statement a moment ago that there were a number of exemptions granted under 133A, and they are not granted as matters which are extraordinary.
For instance, I can think, during the postwar period, of a number of exemptions being granted for engineers, mates and so on- second mates acting in the place of first mates, and third engineers in the place of second engineers, because it was impossible to get first class engineers and first class mates. And they were done as a matter of course.


Douglas Scott Harkness: That has nothing to do with this.


Howard Charles Green: That is the type of exemption which was contemplated by section 133A.


Lionel Chevrier: Not necessarily.
Supply-External Affairs


Howard Charles Green: Not the wholesale exemption of masters, mates and engineers on seven vessels, obviously.


Lionel Chevrier: I noticed the hon. member made that point this afternoon, and he makes it again tonight. I notice that in prior applications under 133A more than one ship has been granted exemption. I cannot give the name from memory, but I know of one case where several applications were made under 133A, and granted at the same time.


Gordon Graydon: Ships in the China sea?


Lionel Chevrier: I am dealing with ships in Canadian waters.


Howard Charles Green: Here were ships operating in communist waters. At the time this exemption was granted, last April or May, all that southeast part of China bad been taken over by the communists. These ships obviously were to operate in communist waters, so there was nothing ordinary, I suggest, about the exemptions.
B.ut whatever the case may be with regard to later exemptions, the minister must have granted this exemption in writing, and I would ask that he produce a copy of that formal exemption which was issued to this company.
Last night the Minister of Trade and Commerce discussed that matter, and he is reported at page 4124 of Hansard in this way:
When they came back under the Canadian flag they were exempted from the requirements. This was the most disturbing condition to meet and, rather than let the ships go, which might have been the wisest course, we did take what seemed to be the practical course, to bring the physical ships under the Canadian flag, but to exempt the ships from the requirements of the Canada Shipping Act as long as they operated in Chinese waters.
The Minister of Trade and Commerce there pointed out that this exemption applied only while these ships were in Chinese waters. Surely the Minister of Transport can produce the actual exemption or exemptions containing these various provisions. If that were done it would help us to get rid of the matter.
He also said in the course of his remarks a few moments ago, or at least gave me the impression, that this application for Canadian registry came out of the blue, in the ordinary way that any application would come for registration. But the Minister of Trade and Commerce made some comments on that side of the question, too, last night when he said:
All went well until the Chinese government, the government of Chiang Kai-shek, fell, and then the banks began to worry a little about their loan. In the uncertain situation that followed, it seemed wise-
4190	HOUSE OF
Supply-External Affairs And obviously the minister meant there that it seemed wise to himself and to his
fellow members in the cabinet.
-to transfer the ships to the Canadian flag, which was done at the request of the Ming Sung Company, which expressed a desire to protect their loans in Canada.
Now, this whole question obviously was considered by the cabinet a year ago. Can either of the ministers, either the Minister of Transport or the Secretary of State for External Affairs, tell us why it was that this protection of the Canadian flag was given to these ships? One or other of those ministers must know why it was that such protection was given. I would ask that they let us have that information now.


Jean Lesage: You had an answer this
afternoon.


Howard Charles Green: No, we did not. And if the
parliamentary assistant thinks we had it this afternoon, I would like to have it tonight.


Lionel Chevrier: I will not keep on repeating the same thing several times. I have said on two occasions in this debate that I have given the house all the information at my disposal at this time. Now, I would ask the hon. member to believe me when I say that I put that information on Hansard this afternoon and again this evening, and that I have no further information. I might be able to get more details or more of the information that has been required when I look into the files, but I think the committee will agree with me that in the twenty or twenty-five minutes at my disposal I did pretty well in getting what I did get concerning a matter which took place over a year ago, and much of which had not to do with my department. My hon. friend asks for information, but I regret that I am unable to give him more than I have given. I repeat that I have given all that is in my possession and that I will do the best I can to get additional information which is in my department concerning this transaction.


Howard Charles Green: I ask the minister what was
the underlying government policy in giving the protection of the Canadian flag to these ships? What was the reason that was done?
I think that is a very material question. Here was a decision and an unusual exemption granted. What was the policy which caused that to be done? There must have been some reason that the government took that step. Why was it taken? It certainly was not merely to help out a private company, I would think. What was the reason that this unusual step was taken?


Lionel Chevrier: My hon. friend will have to ask that of some other minister. I did say [Mr. Green.l

this afternoon that the circumstances surrounding the application were that the ships were likely to fall into communist hands; that unless something were done to give the protection of the Canadian flag or the British flag that would happen. I also said that there were no British officers, that is mates or engineers, available in Hong Kong for the manning of these ships.


Howard Charles Green: What difference would it make to Canada if these Chinese ships did fall into communist hands? These were ships which had never been registered as Canadian ships, except perhaps during the course of their building. They were registered as Chinese ships under the Chinese nationalist government. Why did the government of Canada take this step in order to prevent these ships falling into the hands of the other Chinese government? What was the reason for doing that?


Lionel Chevrier: I think the Minister of Trade and Commerce covered that in his statement last night and if the hon member will look at page 4124 of Hansard he will find the answer.


Howard Charles Green: Is the answer because the dominion government had guaranteed the bank loan? Is that what the Minister of Transport means?


Lionel Chevrier: If my hon. friend is trying to get from me information concerning finance, then I am afraid I cannot give it to him. I have dealt with the matter as far as I can as it concerns the Department of Transport.


Edmund Davie Fulton: In the course of his remarks a little earlier the Minister of Transport, referring to what the hon. member for Lake Centre had said, -made the statement that the circumstances surrounding this transaction and its present development were not as extraordinary as the hon. member for Lake Centre and those associated with him would lead us to believe. As a matter of fact I think the committee will probably decide that on the contrary the circumstances are more extraordinary than the ministers who have spoken so far this afternoon are prepared to admit. Indeed the circumstances have been extraordinary ever since the inception of this whole transaction which has landed us where we are today.
We have heard about five ships and two ships which appear to have gone missing.
I believe that there were more ships than that. I should like to hear from the government as to what has happened to the other ships which were purchased by this Ming Sung Industrial Company Limited under a government-guaranteed loan. I believe that there were more ships and I should like to

have confirmation of that and to know what has happened to them. Are they in communist hands? Why were they not included in this arrangement? Are they trading with the enemy? What has happened to them?
In a further reference to the questions asked by the hon. member for Lake Centre the Minister of Transport stated that the government did not know anything about the incorporation of the Canadian subsidiary and that he did not know whether it was a dominion or provincial company. Surely the government must have known and must have had information at the time. I am not saying that the minister should remember all the details, but the government surely must have known at the time of the circumstances of this incorporation of the Canadian subsidiary because they had an outstanding loan against these ships.
If the bill of sale of the ships to be registered was in the name of the Canadian subsidiary, surely the government must have had knowledge of that bill of sale at the time they were registered and thus have known of the Canadian subsidiary. If my recollection serves me correctly, it could not have been a provincial company. As I understand the British North America Act, any firm engaged in trans-ocean or inter-coastal shipping could not possibly be incorporated under a provincial charter. It must be a firm incorporated under a dominion charter because the dominion has exclusive jurisdiction over that type of shipping. The federal government must have known at the time when this firm was incorporated. I do not think the committee should be satisfied with the refusal of information at this time on the ground, "Well, we probably do not know anything about it anyway because it may not even have been a dominion charter".


Louis-René Beaudoin: I am sorry to
interrupt the hon. member, but I should like to bring to his attention a few citations which I think are appropriate on this occasion. The acting leader of the government has already stated that all the information that was available at this time was put before the committee. The Secretary of State for External Affairs made a similar statement this afternoon. The Minister of Transport has said repeatedly this evening that he has put before the committee all the information which was in his possession at the present moment, which was available at the moment. Citation 240 of Beauchesne, third edition, to be found at page 103, reads:
It has been formally ruled by Speakers in the Canadian commons that a statement by an honourable member respecting himself and peculiarly within his own knowledge must be accepted,- 80709-267
Supply-External Affairs
Citation 241 reads:
A statement made by a member in his place, is considered as made upon honour and cannot be questioned in the house or out of it.
I do not think hon. members should say repeatedly that the minister should have this information now or should give the committee more information after so many statements have been made by ministers and by the acting leader of the government that all the information that is available at this time has been put before the committee. I should like hon. members in taking part in the debate during whatever time is yet available before adjournment to bear these citations in mind.


George Alexander Drew: I recall no occasion on which
it has been said that all the information now available is before us. It has been said-


Lionel Chevrier: I made that statement, that all the information at my disposal-


George Alexander Drew: That is quite different and
that is exactly what I want to point out. It is one thing for a minister to say that he has given to the house what he knows himself. The minister has a file on the Ming Sung Company. He could get that file. Even if there was an oral directive, which would be an interesting thing, there would be a copy there of the letter sent by the minister or his official to the Ming Sung Company interpreting that oral directive and telling the company under what circumstances they could have this registry transferred. The details will all be there and those details could be brought to this committee within a few minutes and presented to this committee.


Louis-René Beaudoin: Perhaps the leader of the opposition did not hear a few words of what I said. I said the Minister of Transport had made a statement to the effect that he had given all the information that was available, and I added, "at this time;" all the information that was available at this time. I am pretty sure I said that. I think the typescript copy of Hansard will prove I said that.


George Alexander Drew: Mr. Chairman, I do not want to split hairs, but there is a vast difference between saying that we have all the information that is available at this time and saying that we have all the information that the minister now possesses, or everything he knows at this time. What I am saying is that it is unthinkable that there is not full information in a file in the Department of Transport with respect to the Ming Sung transaction. I qualify that by saying that the minister thinks that it was an oral directive, and if so then it is absolutely certain that there is a file readily available which

Supply-External Affairs will contain the letter or letters which interpreted that oral directive and told the Ming Sung Company the exact conditions under which they would be able to carry out this change of registry.


Lionel Chevrier: I think that the leader of the opposition must have been out of the house when, over and above what he repeated, I added that I would get any other information that was available.


George Alexander Drew: Get it now.


Lionel Chevrier: No, I cannot get it now.


Edmund Davie Fulton: Mr. Chairman, I should like to point out that at the time you referred to certain citations I was dealing with the reasons advanced by the minister in support of the proposition that very probably this information was not in the possession of the government at all, and would not have been in the possession of the government at that time. I said that it might not be at the moment in the personal possession of the minister, but 1 was trying to show that the general information which we are seeking must be in the possession of the government for the reasons I advanced. The minister made other statements this afternoon concerning which I do not think any questions have been asked him yet, and as to which I would think he would have the information available now. I will ask him the questions and then perhaps he can tell us whether he can answer them now or later. One of the questions was actually asked by the hon. member for Vancouver-Quadra and has not yet been answered or referred to in the minister's reply.
What power has the minister under the Canada Shipping Act to strike these ships off registry? It has been suggested that that should be done, and suggested very strongly for reasons which have, been advanced. The minister has not yet stated what power he has, and what he would have to go through to do that. The other matter to which I should like to refer is that the minister stated very clearly that at the time the exemption was applied for he had doubts as to whether the exemption should be granted, and because of those doubts he referred the matter to his colleagues in the cabinet. That was the minister's statement this afternoon. I can only presume that when he made it he recollected the doubts that he had. I should like to ask him therefore what were the doubts? Why did the minister think that it might not be proper, wise or propitious to grant this exemption? What were the doubts, and what was the basis upon which those doubts came into his mind? I think that is very pertinent indeed because in this case 

the minister appears to have been wiser than his colleagues. If he had doubts one must assume they were removed by his colleagues whereas actually his doubts were correct and the decision of the cabinet seems to me to have been shown to be wrong. I should like to ask the minister at this time to answer these questions. Then there are some further questions that I think should be put to the Secretary of State for External Affairs regarding the transaction. Perhaps the Minister of Transport would be kind enough to answer these questions first.


Lionel Chevrier: With reference to the first
part of the hon. member's statement in which he referred to me as having said that there was nothing extraordinary about the transaction, I think if he looks up Hansard he will find that I was referring to the first part of this application. When I made that statement I was dealing with an application to register a ship under the Canadian flag. I stated that there was nothing extraordinary about that because that is done in the usual manner, and I tried to explain how it was done, by the filing of the bill of sale in the usual office. I am asked what power there is to withdraw. I presume there is the same power as there is to grant an exemption.
In so far as doubts are concerned, I suppose if my hon. friend were to continue his probing he could ask additional questions as to what other things were in my mind at the time. I do not know that I am required to give to the committee what the doubts were that were in my mind, if there were any doubts. What I stated was that usually an application under 133A is dealt with in the discretion of the minister in the ordinary manner, and as a rule I do not submit them to cabinet. In this case I felt that it should be submitted, and I did so. I do not think I need go beyond that. I do not think I am under cross-examination in the committee. I think that when I state that these were the circumstances I have gone as far as any minister is required to go. So far as giving the doubts that might have emerged in my mind at the time, I do not know that I would remember all of them that came up twelve, fifteen or sixteen months ago. Therefore I think I have discharged my responsibility to this house in giving the information which I have.


Edmund Davie Fulton: The purpose of the question
is to find out if possible whether there were any circumstances known to the minister.


Lionel Chevrier: In answer to two questions I placed on the record what the circumstances were which led me to submit it to cabinet, in answer to a question by the hon.

member for Vancouver-Quadra and, I think, in answer to another hon. member prior to six o'clock. That is a matter of record.


Edmund Davie Fulton: I do not think the minister
has been asked this question. Does the minister know who the directors are of the present affiliated Canadian company?


Lionel Chevrier: I presume that can be
obtained but I do not know at this time.


Edmund Davie Fulton: The minister has no knowledge at the present time concerning this company?


Lionel Chevrier: I have no recollection at
this time of the directors of the Canadian corporation which made the application in March of 1950. I could hardly be expected to have that recollection.


William Joseph Browne: There are
one or two questions I should like to ask the Minister of Transport. I should like to know where these ships were when application was made to have them registered in Canada. The Minister of Trade and Commerce said that two of them were on the Yangtze. I do not imagine they went up there in 1950. They must have been there before, and therefore they must have been in communist possession when registration was sought.


Jean Lesage: Those two were never
registered.


Lionel Chevrier: Was the hon. member in
the house this afternoon?


William Joseph Browne: Yes.


Lionel Chevrier: Does he remember that I
made the statement that the information I had at that time was that these two ships were not under Canadian registry?


Howard Charles Green: The minister said tonight there were seven.


William Joseph Browne: The statement was made that seven were registered.


Jean Lesage: There were nine altogether.


William Joseph Browne: Were there nine ships?


George Randolph Pearkes: Two more.


William Joseph Browne: There is
another question I should like to put to the minister.


George Alexander Drew: Were there nine?


Jean Lesage: There were nine built.


George Alexander Drew: Nine built?


Jean Lesage: Nine built. If the leader of
the opposition would go back to the debates in the spring of 1949 he would find that all 80709-2671
Supply-External Affairs the fundamentals of this situation were discussed. If he will refer to the 1949 Hansard of the first session he will find that there were nine ships built.


Douglas Scott Harkness: And sold?


William Joseph Browne: There is another point I wish to put before the minister. The minister stated the application was grounded on the information that they could not obtain British mates, engineers and officers to man these ships. Therefore they had to be manned by Chinese. Does the minister now believe that was true; and at that time did he really believe it was true?


Lionel Chevrier: On a point of order, Mr. Chairman, the hon. member is going a bit far when he asks whether I really believed it. Of course I believed at that time, as I believe now, that there were no British officers or mates or engineers *who could be obtained. Otherwise I would not have submitted the application for the exemption to my colleagues and granted the exemption. When my hon. friend pursues the point he casts doubt upon my integrity, and if he is doing that he is acting contrary to the rules of this house.


William Joseph Browne: I was not
casting doubt upon the minister's integrity, but he will remember that he said this was over a year ago and it was difficult for him to remember. I was drawing to his attention that point, and I now draw this further point. Does he not recall that last year we had a very difficult unemployment situation in this country, with 400,000 people [DOT] drawing relief? There must have been thousands of engineers, mates, officers and crew members available at that time to man these seven ships The lakes were closed, navigation on the St. Law'rence was closed, and men must have been available. That is why I would like the minister to produce the correspondence with the Ming Sung Company in regard to this whole matter so the house may judge whether the decision was properly made.


Edmund Davie Fulton: I wanted to ask the Secretary of State for External Affairs some questions, but if hon. members have other questions to ask the Minister of Transport perhaps I should wait. The circumstances surrounding this transaction, which have been referred to by the parliamentary assistant, as he has pointed out are recorded in Hansard for April 7, 1949. According to those circumstances it would appear that there is a considerable obligation outstanding against these ships on the part of the government of Chiang Kai-shek. I should like to know the circumstances surrounding that obligation; what negotiations we are conducting with
4194	HOUSE OF
Supply-External Affairs that government and why, if this is the situation-and if it is not I hope the minister will tell the house-and this obligation is guaranteed in part by this government, these ships in which the Canadian government has a very heavy financial interest are permitted, while under the Canadian flag, to trade with people who are at present engaged in hostilities against Canadian troops. Instead of being under the control of the government which made the loan available so the ships might in fact be delivered to the Ming Sung Company, they are now under control of the company and trading with the communist government of China. Ships made available through moneys advanced by the Canadian government on the request of the nationalist government of China, for which that government is liable under the terms of the guarantee, are now trading with what is in effect the enemy. I should like the minister to explain that situation and tell us what negotiations are going on with the Chiang Kai-shek government with respect to that liability.


Lester Bowles Pearson: I do not think I am capable of explaining all the financial details of this transaction, which took place some years ago. No doubt when the Department of Finance estimates are brought forward the hon. gentleman will have an opportunity to get this information.


Edmund Davie Fulton: I might save some time if I
make it clear that I am not asking for the details surrounding the financial transaction.
I am asking what negotiations are in process or 'what contacts we have with the Chiang Kai-shek government regarding the outstanding liability. I am also asking why these ships, on which the Chiang Kai-shek government has a liability to us, are now being allowed to trade with the enemy of that government, a country whose soldiers are fighting Canadian soldiers.


Lester Bowles Pearson: As far as I know, the Chiang Kai-shek government, which is the government of China we still recognize, has no connection with or liability or obligation in regard to this transaction. As to the statement by the hon. gentleman that we are giving permission for these ships to trade with communist China, which is fighting us in Korea, these ships have no permission that is not granted to any other Canadian ship, and they are not in a special position of any kind. Under Canadian law there is no embargo on shipments to China except in respect of a list of strategic materials; and we have been informed that this list of strategic materials is being recognized by the owners and operators of these ships.
TMr. Fulton.]


Edmund Davie Fulton: I should like to correct the
minister in both those statements, because they are directly at variance with the facts as disclosed by the record. The minister has just said that as far as he knows the Chiang Kai-shek government has no liability in connection with these ships. When the matter was being discussed in April, 1949, on several occasions the Minister of Trade and Commerce told us that the Canadian government stepped in at least in part at the request of the Chiang Kai-shek government, and that the advance made by the banks was guaranteed jointly by the government of Canada and the government of Chiang Kai-shek. So the minister's statement on the first point is not in accord with what we were told two years ago.
Then the minister said these ships were not in a different position and enjoyed no special permission with respect to trading with communist China than any other ship under the Canadian flag. I point out to him that they are in a very special position. They are under the Canadian flag, it is true, but they are manned by Chinese; and the suggestion has been made that one of the captains is a Russian. That has been neither confirmed nor denied.


Lester Bowles Pearson: It has been denied.


Edmund Davie Fulton: But they are manned by
Chinese crews, and as far as we know by Chinese communist crews. Apparently they trade freely with communist China, and as far as I know they are the only ships under the Canadian flag carrying on that trade today. So certainly they are in a far different position than any other ship under our flag. I would like the minister, if he will, to reconcile the statements he has made with those earlier statements, and to say what is the present position in that regard.


Lester Bowles Pearson: If I said the Chiang Kai-shek government had no obligation in regard to this transaction, possibly that was inaccurate. I might have been more accurate in saying that the Chiang Kai-shek government now accepted no obligation in respect of those ships, which have been transferred to Canadian registry. As far as the second question is concerned, these ships are subject to Canadian regulations, and are in exactly the same position legally as any other ship under Canadian registry.


Douglas Scott Harkness: I take considerable objection to the statement by the minister that these ships are in no different position than any other ships flying the Canadian flag. The hon. member for Kamloops has already pointed out one essential difference. Another

difference which is even more essential is that these ships are owned by the Ming Sung Company, whose headquarters as far as I know are in communist China. As a matter of fact I believe they are in Chungking.


Lester Bowles Pearson: They are in Montreal.


Douglas Scott Harkness: I believe the headquarters of this company are at Chungking. They have a Canadian subsidiary in Montreal. They have another subsidiary at Hong Kong, and so on; but actually the people who own these ships have their headquarters at Chungking as far as I know, and they are completely under the thumb of Mr. Mao. That puts these ships in a totally different position than any other ships flying the Canadian flag. In those circumstances they are really under the control of Mao and his communist Chinese government. Any orders they give in connection with these ships are carried out, I imagine, and will continue to be carried out unless our government steps in and seizes them, as has been suggested by the hon. member for Vancouver-Quadra, or brings them back under Canadian control. Apart from that these ships are flying our flag while actually under the command of the rulers of communist China.
There is one other matter on which I should like to comment during this debate. When speaking of the exemptions that he gave to this company, the Minister of Transport made quite a point of the fact that the names put in for these exemptions were Chinese. He seemed to be concerned at that time with disproving the statement made in the letter read by the member for Nanaimo that one of these captains was a Russian. The thing that struck me in connection with that was, why did the fact that the names of the officers of these ships were Chinese give the minister the idea that the exempting of these ships from Canadian law was the right thing to do, in view of the fact that at that time Mao was in control of China? Chiang Kai-shek had been expelled from China, and Mao and the communists were in control. The fact that the names of the captains submitted to the minister were Chinese I would have thought would 'have caused him to question the advisability of waiving the law in favour of these people.
It seems to me that does not in the least explain why this permission was given. It just makes the thing more obscure than ever. I am quite sure that the directive which has been requested exists. I do not understand why, during the three hours from six o'clock until nine o'clock when the committee resumed its business, this directive could not be secured. If it is not a written
Supply-External Affairs directive, at any rate there must have been a note made of it in the proceedings of the cabinet. I cannot understand why, within those three hours, either the written directive, or the stenographic note made of the fact that there was a directive, has not been produced for us to see. Then, we would know what the situation is. It seems to me that until either the directive or the note made of it has been produced, the government is being anything but frank in its disclosures in connection with the whole matter.


Agar Rodney Adamson: There are one or two questions I should like to ask the Minister of Transport in order to get the matter elucidated. I am not one who does not believe the minister has acted in anything but the best of good faith. Apparently these nine ships were constructed in 1948 and 1949 specifically for this river trade or the trade on the China seas. I understand that any ships trading on the Yangtze have to be specially constructed, and therefore at the commencement of the laying of the keels for these ships the trade they were going to enter must have been fully understood by the government, the banks, the ship contractors, the Chinese company and everyone else connected with them. The use to which these ships were going to be put must have been known for a considerable time.
I understand that there were the seven ships in question, and the two others making up the nine are presently under Panamanian registry and are undertaking this trade. The first question I should like to have answered, therefore, if it is possible, is whether the other ships were built under the same financial guarantee as those ships now plying the Chinese trade to which reference has been made this afternoon. In this connection, I should like to quote an editorial in a periodical known as the Syren and Shipping, which is generally accepted as the spokesman for British shipbuilding. The article is in the May 16 issue. The first two paragraphs describe the restrictions and regulations put on shipments from Hong Kong, and the inspection and care taken to see that contraband is not shipped directly to communist China. I mention these first two paragraphs, because I do not want to distort what this semi-official periodical has to say. This is headed "The Truth About Hong Kong," and in the third paragraph, which is headed "China's Attitude", it says:
China has all .along kept very quiet about Hong Kong, as it has been of such use as a trading post for international trade-not for war stores, because of the effective control we have described-but for domestic purposes.


Some hon. Members:: Oh, oh.


Agar Rodney Adamson: -but if I were interested in running a shipping line, I would damn well know what business my ships were in.


Alphonse Fournier: Order.


Agar Rodney Adamson: If I were running a shipping business, I would know what cargoes my ships were carrying; and if I were responsible for looking after the granting of indemnities to ships, I would know what was happening.


Mr. Sinnoil:: It will be a long time before you are running one.


Joseph-Alfred Dion: Order.


Agar Rodney Adamson: It is a strange thing, Mr. Chairman, but the Greeks had a word for people who made baa-baa noises in the back row. They called them barbarians. We merely call them heathen Chinese.


George Randolph Pearkes: Having been the first member to introduce the storms of the south China seas to the calm waters of this committee, Mr. Chairman, I should like to add a few words before you rise and report progress.


Alphonse Fournier: Or carry the item.


George Randolph Pearkes: When the committee reassembled after the break for the luncheon hour, the Secretary of State for External Affairs referred to the fact that he had lost

his usual composure just before the committee rose for lunch. During that brief period in which he was speaking before lunch he suggested that I should feel sorry for the statements I had made. He suggested that I would rue the day. He did not use those words, but in his remarks he most definitely used a tone which was almost threatening, when he said that I should be sorry for the statements which I had made.
I now want to examine the statements which I made-and I was quoting from this letter-just in order to show how far the statements which were made by the general secretary of the navigating and engineer officers guild have been borne out and supported in this discussion. The first point which was brought out in the letter was that vessels of the Ming Sung Industrial Company were trading between Hong Kong, Macao and Canton. Evidence has been produced by ministers here today to show that that statement is correct. The next one was that Canton is a port under the direct control of a government with which the government of the Dominion of Canada has no political relations. I think that statement can be accepted. It has certainly not been denied here today. The third point was: What were these vessels carrying? On the one hand the secretary of the guild reports that eyewitnesses have stated that the daily cargoes included essential war materials. On the other hand we have had produced here today by the Minister of Trade and Commerce a letter from a branch of the company concerned which states that it is not carrying essential war materials out of Hong Kong.


John Horace Dickey: Would the hon. member permit a question?


George Randolph Pearkes: No, I have not much tjme and I would like to finish what I have to say first. Then you may ask your question.


John Horace Dickey: I thought the hon. member might like to state where the eyewitnesses were located.


George Randolph Pearkes: It has been shown that these vessels leaving Hong Kong can go to Macao and then on to Canton. I would like to call attention to the fact that, because of its strategic importance and because of its reputation as a port, although it is not a port of China proper, Macao has been named by the Minister of Trade and Commerce as one of those points to which strategic war materials may not be sent.
So there is at least the -possibility that, having cleared from the Hong Kong government, these ships -could go and pick up essential war materials from Macao for
Supply-External Affairs delivery elsewhere. Because quite obviously it is an entree port into communist China.
The next point was that these vessels are trading under a Canadian flag. This was substantiated here this afternoon time after time.
The fifth is that they are officered and manned by Chinese, and that one has a Russian captain. There is no question about their being officered and manned by Chinese. There has been doubt, in fact it has been emphatically denied, that there is a Russian ca-ptain. Well, it is quite possible that such a mistake could have been made, because it is pretty hard to distinguish between some Russians and Chinese. We must remember that the Mongolian is a Russian, and a Mongolian looks very much like a Chinaman, to those who are not familiar with those people.


John Horace Dickey: Pretty weak!


George Randolph Pearkes: Then the next point was that the Ming Sung Company trades in China under the flag of the people's republic of China. There has been evidence today to show that at least two vessels which were taken-if "taken" is the right word-which were operating up the Yangtze, which were built in Canada, and which were included in these original seven or nine vessels which were sold, are still operating on the Yangtze under the flag of the people's republic of China. I do not think that has been denied.
The next point is that the regulations have been evaded. Perhaps "evaded" is not quite the right word, because they were granted exemption from adhering to the Canadian regulations. The average person in Hong Kong would not know that the exemption had been granted. It is quite a reasonable assumption to make that the regulations were being evaded.
There is no question about the concern which such organizations as the merchant navy officers organization, and others, have felt about this matter. So, thus far, I see no cause for great concern on my part. I am not repentant for having brought this matter before the House of Commons. I believe it was my duty to bring it to the attention of hon. members, because it is a serious matter. Because, while there may be some slight inaccuracies, as perhaps have come out

and not yet proved-I still feel that this discussion has brought before the people of Canada a very critical, dangerous, unsatisfactory and, to use the word used last night by the Minister of Trade and Commerce, unhappy situation.
I repeat the request I made earlier in the discussion, that something be done to stop
4198	HOUSE OF
Supply-External Affairs the possibility of this trade going on with Canadian ships in enemy territory. I cannot help accusing the government of being somewhat slack in this matter. They knew that these Canadian ships trading under the Canadian flag were operating in those waters since last summer. They also knew that the Chinese troops started fighting in North Korea last November; and it seems to me rather extraordinary that, so far as we can find out from the discussion today, until a week ago no attempt has been made to try to correct this situation.
I think I have dealt with those points. I do want to stress once again that the ships are operating for this Ming Sung Company- a large company which, as has been admitted today, has ramifications and branches throughout China. I would ask this question: Who is getting the protection from the action of this government? I think it is fairly obvious, in the first place, that the profits accruing from this trade must be going to the directors of the Ming Sung Company. I repeat that it is a company which has branches throughout communist China. Quite obviously if they have their branches in communist China, and if those ships are trading even with the port of Canton, then the communist government of China is also getting the benefit from this trade, because it will be taxing the commodities that come in, and the trade going on. So, from the decision made by this government, it is in some measure enabling the government of a country opposed to our troops in Korea to obtain additional revenue.
Then, thirdly, as to the holders of the mortgage, the various banks which are concerned in this matter, they are getting interest on the principal, the principal being something in the neighbourhood of $12,750,000. They are getting interest on that amount of money.
Those are the three groups which in the main are benefited by the fact that the Canadian government took ships back under the Canadian flag and continued to underwrite the loans which had been made. I was not quite clear on one point when it was stated that the Chiang Kai-shek or nationalist government of China had abrogated its responsibility. I think that is what the Secretary of State for External Affairs said with regard to the original guarantee that had been given. Does that mean that Canada has taken over the whole of the guarantee which was given originally?
I understand that Canada accepted only . fifty per cent of that guarantee.
I repeat that far from being penitent, as I think the Secretary of State for External 

Affairs would like me to be, or far from being sorry for having introduced this subject-I do not think he need take that attitude-I think it has been a discussion of value. It has been heated at times, but I do think that it has drawn to the attention of the government and of the people of Canada a situation which needs correcting and which in my humble opinion it is within the power of the government to correct.


Mr. Fulford:: I should like to ask the
Secretary of State for External Affairs if ships flying the flags of other nations in the United Nations are plying on this triangular route? I refer particularly to ships flying the stars and stripes, or flags of the commonwealth or of France. It seems to me tha. this is a well established trade and that there are ships of many nations, including members of the United Nations, engaged in it.


Lester Bowles Pearson: To the best of my knowledge there are a great many ships still engaged in the China trade. All those members of the United Nations which have accepted the obligation of preventing strategic materials getting to China do not carry such materials on their ships running into communist China at this time. There is no complete embargo on trade with China, so far as I know.


George Taylor Fulford: I ask that question to indicate that others are engaged in the same kind of trade.


George Alexander Drew: Reference was made by the
parliamentary assistant to the minister to the debate which took place on April 7, 1949. That debate, of course, did not relate in any way to the major consideration which is before us today.


Lionel Chevrier: Oh, yes, it did.


George Alexander Drew: That debate did not in any
way relate to the transfer of the registry of ships that had been under the control of communist China to Canadian registry, thus being able to fly the Canadian flag.


Lionel Chevrier: You said that the debate
did not in any way relate to this matter. I say it did in some way relate to this matter. Very much did it relate to this matter.


George Alexander Drew: If the minister had been listening he would have heard what I said. I said very clearly that it in no way related to the major subject under discussion here, and I made it quite clear what it was and what it is.


Lionel Chevrier: You are remembering it now.


George Alexander Drew: It was the transfer of these ships to Canadian registry. In so far as the interjection made by the parliamentary assistant is concerned, I would point out that he was inaccurate in suggesting that the general debate at that time had disclosed that all these ships had been delivered. It did not. It disclosed the number of ships which were under contract and at that time the Minister of Trade and Commerce expressed the expectation that the contracts would be completed later that year.
We, of course, have not had an opportunity since that time to be informed as to the fulfilment of those details. In so far as the ships which were transferred are concerned, I would suggest that when this item is called again it probably can be disposed of very quickly if the government in the meantime will have obtained the essential information which they have and which they can give to this house. They are in position-


Lionel Chevrier: That is exactly what the Minister of Public Works desired at the beginning of this debate.


Howard Charles Green: You had better run along and get your report.


George Alexander Drew: The government has simply been evading the real facts in this case and trying to create the pretence that they cannot give information which would fully disclose what is the situation. This is an interesting sequel to the debate in 1949. It was a strange transaction then. This came before the house to ratify an irregular payment by the government. That payment was an obligation that had been incurred in excess of the original contract amount. That was disposed of at that time.
Anyone who wishes to refer to the debate on that day will see that the government was very fully informed in regard to the Ming Sung Company and in regard to the nature of its activities and in regard to where it carried on business. The thing that should be remembered in this is that this is a company primarily operating in communist China. The interesting thing is that the government was prepared to accept a statement from that company delivered to them in Hong Kong as more reliable than a statement sent here by men who were working on these ships or working on ships out of Hong Kong and who, we have every reason to believe, were interested in the welfare of the shipping.
This situation is not merely an incident, it is a symptom of conditions. If this government were really taking a firm stand in regard to communism instead of its attitude in regard to trade with communist China,
Supply-External Affairs this would not have happened, and we would not so easily have made this of definite advantage to a company now operating within communist China.
Item stands.
Progress reported.



BUSINESS OF THE HOUSE

['We do not know yet. The fourth is Bill No. 376, respecting the construction of a line by Canadian National Railway Company from Sherridon to Lynn lake. Then we will take up the resolution in the name of the Minister of Veterans Affairs to amend the Returned Soldiers Insurance Act. I could not get this through the other day because the hon. member for Royal was not here, but he assured fie it was not contentious and that they were anxious to have it proceeded with. Then we will take up the resolution in the name of the Minister of Finance to make certain grants to municipalities in respect of federal properties situated therein; then Bill No. 296, an act to amend the Income Tax Act. That is the bill of the day. Then we will take up Bill No. 194, an act to amend the Emergency Gold Mining Assistance Act. That is not contentious either.']
Alphonse Fournier: Mr. Speaker, on
Monday we intend to take up four noncontentious bills. Three of them, Bill No. 372, Bill No. 373 and Bill No. 374, relate to income tax agreements with Sweden and France.


Stanley Howard Knowles: There is not one with China, is there?


Alphonse Fournier: We do not know yet. The fourth is Bill No. 376, respecting the construction of a line by Canadian National Railway Company from Sherridon to Lynn lake. Then we will take up the resolution in the name of the Minister of Veterans Affairs to amend the Returned Soldiers Insurance Act. I could not get this through the other day because the hon. member for Royal was not here, but he assured fie it was not contentious and that they were anxious to have it proceeded with. Then we will take up the resolution in the name of the Minister of Finance to make certain grants to municipalities in respect of federal properties situated therein; then Bill No. 296, an act to amend the Income Tax Act. That is the bill of the day. Then we will take up Bill No. 194, an act to amend the Emergency Gold Mining Assistance Act. That is not contentious either.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[The following items were passed in committee of supply]:

[Stage Direction]
85.	Passport office administration, $194,568.
86.	Representation abroad-operational-including payment of salaries of high commissioners, ambassadors, ministers plenipotentiary, consuls, secretaries and staff appointed as directed by the governor general in council, notwithstanding anything to the contrary in the Civil Service Act or any of its amendments, $4,492,816.
87.	Representation abroad-construction, acquisition or improvement of buildings, works, land, new equipment and furnishings, $228,940.
88.	Representation abroad-to authorize the construction, acquisition, improvement and furnishing of properties for Canadian government offices and residences abroad, payment therefor to be made in foreign currencies that are not convertible into Canadian or United States dollars and that may be used only for governmental or other limited purposes and that have beep acquired in respect of reparations or pursuant to the settlement of claims
[Stage Direction]
Supply-External Affairs arising out of military operations or war expenditures, or in exchange for other such currencies so acquired, $1,042,500.
89.	To provide for official hospitality, $20,000.
90.	To provide for relief of distressed Canadian citizens abroad and for the reimbursement of the United Kingdom for relief expenditures incurred by its diplomatic and consular posts on Canadian account (part recoverable), $15,000.
91.	Canadian representation at international conferences, $225,000.
92.	Canadian section of Canada-United States permanent joint board on defence including $7,500 for the chairman, notwithstanding anything contained in the Civil Service Act, $10,000.
93.	Grant to the United Nations Association in Canada, $10,000.
94.	Grant to the Canadian Red Cross Society (for international activities of the Red Cross), $25,000.
B-General-
The Canadian government's assessment for membership in the following international or commonwealth organizations-
95.	United nations organization, $1,466,100. Specialized agencies-
96.	Food and agriculture organization of the United Nations, $109,000.
97.	International labour organization, $256,300.
98.	United nations educational, scientific and cultural organization, $327,800.
99.	International civil aviation organization, $114,630.
100.	World health organization, $231,200.
101.	Commonwealth economic committee, $16,830.
102.	Commonwealth shipping committee, $510.
103.	Inter-allied reparations agency, $7,000.
104.	Inter-American committee on social security, $4,700.
105.	The Canadian government's contribution to the administration of the general agreement on tariffs and trade, $14,300.
International civil aviation organization-
106.	To provide the international civil aviation organization with office accommodation at cost, $66,604.
International joint commission-
107.	To provide for preliminary studies and surveys of the mid-western watershed, $10,000.
108.	To provide for Canada's share of an investigation on the matter of air pollution in the vicinity of Detroit and Windsor, $40,000.
109.	To provide for Canada's share of the expenses in connection with the St. John river reference, $50,000.
110.	To provide for Canada's share of the expenses of the Niagara Falls reference, $50,000.
Terminable services-
111.	Commonwealth consultative committee on south and southeast Asia (for technical assistance), $400,000.
External affairs-
566. To authorize and provide for working capital advances in the current and subsequent fiscal years to maintain cash and bank balances at Department of External Affairs posts abroad, subject to regulations of the treasury board, the amount of advances hereby authorized outstanding at any time not to exceed $300,000.
[Stage Direction]
Monday, June 18, 1951